This action might not be possible to undo. Are you sure you want to continue?
A project report on a Brokerage company Sharekhan Ltd.
Being submitted in partial fulfillment of the
BACHELOR OF MANAGEMENT STUDIES (2008-2011)
Submitted to:Ms. Priyanka mam
Submitted by:Ravi Suthar
Chapter No 1 2 3 4 5 6 7 8 Topic Introduction Company profile Mission and vision Objective SWOT analysis Competitors Product and service Introduction to Commodity Market 9 History of Commodity Market in India 10 Commodity exchanges in India Page No.
NCDEX MCX NMCX
Analysis International Commodity Exchanges Quantitative Analysis How Commodity market works?
How to invest in a Commodity Market? Current Scenario in Indian Commodity Market
17 18 19 20
money managers. A financial system functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit. The phenomenon of imbalance in the distribution of capital or funds existed in every economic system. practices. markets. The functions performed by a financial system are: THE SAVINGS FUNCTION: LIQUIDITY FUNCTION: PAYMENT FUNCTION: RISK FUNCTION: POLICY FUNCTION: COMPANY PROFILE SHAREKHAN LIMITED 4 .FINANCIAL SYSTEM The financial is one of the most important inventions of the modern society. A financial system is a composition of various institutions. regulations and laws. There are areas or people with surplus funds and there are those with a deficit. analysts. transactions and claims and liabilities.
Sharekhan was established by Morakhia family in 1999-2000 and Morakhia family.500 companies for in-depth information. It is the retail broking arm of the Mumbaibased SSKI [SHANTILAL SHEWANTILAL KANTILAL ISWARNATH LIMITED] Group. telephone and retail outlets. FII transactions. mutual funds and IPOs. investor friendly language and high quality research.500 mutual fund schemes and IPO data.www.was also launched on Feb 8. margin funding. equities. NSE. derivatives. the SSKI group ventured into institutional broking and corporate finance over a decade ago. Depository services. Share khan has one of the best states of art web portal providing fundamental and statistical information across equity.an Internet platform. online trading. The company provides equity based products (research. Investment advice. SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy of more than 80 years in the stock markets. customer commitment and superior technology. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. etc.com .).com.Sharekhan. They provide trade execution services through multiple channels . It is first brokerage Company to go online.Sharekhan is one of the top retail brokerage houses in India with a strong online trading platform. details about more than 1. and Derivatives. 2000. With their research expertise. Sharekhan's management team is one of the strongest in the sector and has positioned Sharekhan to take advantage of the growing consumer demand for financial services 5 . depository. etc. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE. the content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. One can surf across 5. result announcements. Sharekhan Ltd. One can also access other market related details such as board meetings. Commodities. they provide investors with end-to-end solutions in investments. is a brokerage firm which is established on 8th February 2000 and now it is having all the rights of SSKI. This site gives access to superior content and transaction facility to retail customers across the country. continues to remain the largest shareholder. The Company's online trading and investment site . It has one of the largest networks in the country with 704 share shops in 280 cities and India’s premier online trading portal www. Known for its jargon-free. buying/selling by mutual funds and much more. The company was awarded the 2005 Most Preferred Stock Broking Brand by Awwaz Consumer Vote.sharekhan.
We look forward to providing strategic counsel to Sharekhan's management as they continue their expansion for the benefit of all shareholders.Sharekhan Limited. a veteran equities solutions company has over 8 decades of experience in the Indian stock markets. It provides a complete life cycle of investment solution in Equities. Their team members are widely respected for their commitment to transactions and their specialized knowledge in their areas of strength. Commodities. it is something that is spoken with years of focused learning and experience in the’ stock markets. Sharekhan's lineage and relationship with SSKI Group provide it a unique position to understand and leverage the growth of the financial services sector." SSKI Corporate Finance Private Limited (SSKI) is a leading India-based investment bank with strong research-driven focus. And these beliefs are reflected in everything Sharekhan does for us! Sharekhan is a part of the SSKI group. Derivatives. with strong presence in Retail equities Institutional equities Investment banking. Share khan Services: Share khan is one of India's leading financial services company. content or for that matter the online trading facility. pan-Indian branch network and an outstanding technology platform. one that helps us make informed decisions and simplifies investing in stocks. The team has completed over US$5 billion worth of deals in the last 5 years making it among the most significant players raising equity in the Indian market. IPO. we'll find a common thread. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse. Sharekhan is also about focus.products in India through investments in research. Further. SSKI. The common thread of empowerment is what Sharekhan's all about! "Sharekhan has always believed in collaborating with like-minded Corporate into forming strategic associations for mutual benefit relationships" says Jaideep Arora. an Indian financial services power house. If we experience their language. Mutual 6 . Sharekhan's expertise lies in stocks and that's what he talks about with authority. Director . Sharekhan does not claim expertise in too many things. presentation style.
Depository services. it reaches out to more than 800. Portfolio Management Services and Insurance. efficiency and integrity.com. 7 . Share khan also offer personalized wealth management services for High Net worth individuals.000 trading customers. With a physical presence in over 300 cities of India through more than 800 "Share Shops". Mission & Vision Mission: To create long term value by empowering individual investors through superior financial services supported by culture based on highest level of teamwork. and an online presence through Sharekhan.Funds. India's premier online destination.
To learn the online terminal used for trading. • To execute business for the company by selling demat accounts and mutual funds. To have a practical experience of working in a reputed organization. To learn to manage time. To know how to open and close the calls. To gain practical knowledge of the market. To know various reasons for market fluctuations. OBJECTIVES: • To project Sharekhan as an authority in the retail stock trading business. To know the various policies of the company.guided by values driven approach to growth. To know how to handle various types of customers.Vision: To provide the most useful and ethical Investment Solutions . SWOT ANALYSIS OF SHAREKHAN 8 . • • • • • • • • • To study the various products of the company. client service and employee development.
STRENGTHS WEAKNESSES • • • • • • year) First brokerage firm to go online. Products PMS Services. Low annual maintenance charge OPPORTUNITIES THREATS • Huge market. Research reports. Competitors. Technology Online fund transfer. Free Demat a/c opening. Clients (average of 15. Competitors: 9 . • • • Recommendations from clients. • • Volatility of the share market.000 accounts per • High brokerage charges but now they have overcome this by a new prepaid scheme in which brokerage is reduced to half.
Share khan is one of the major player in on line Trading. India Info line 3. 5 Paisa 9. At the same time. Key product offerings are as follows:- 10 . Religare Enterprises 2. ICICI DIRECT 4. Kotak Securities 7. Sharekhan is a customer focused financial services organization providing a range of investment solutions to our customers. Mutual Funds and IPO’s also. Our personalized approach enables clients to achieve their Total Investment Objectives. The main competitors of Share khan are: 1. they have the advantage of having all Advisory Services for Life Insurance. as we understand the need of transactions to be executed with high speed and reduced time. We work with clients to meet their overall investment objectives and achieve their financial goals. Our clients have the opportunity to get personalized services depending on their investment profiles. INDIA BULLS 5. Angel Trade 11. MOTILAL OSWAL 8. General Insurance. RELIANCE MONEY 6. Standard Chartered Product & services:Share khan customers have the advantage of trading in all the market segments together in the same window. HDFC 10.
Online services (b). Insurance 5.Equity 2.1. NRI Services 7. Fixed Income 6. Distribution (a). Depository 4. Properties Introduction to Commodity Market 11 . Commodity 3. IPO (c). Back Office 8. Mutual Fund (d).
"proper measure. and fluctuates daily based on global supply and demand. but which is supplied without qualitative differentiation across a market. A commodity is something for which there is demand. Our clients have the opportunity to get personalized services depending on their investment profiles.".meant variously "appropriate". on the other hand.What is “Commodity”? The word commodity came into use in English in the 15th century. notebook paper. or milk. they have the advantage of having all Advisory Services for Life Insurance. adaptation. Generally. time or condition" and advantage. We work with clients to meet their overall investment objectives and achieve their financial goals. One of the characteristics of a commodity good is that its price is determined as a function of its market as a whole. the French word derived from the Latin commoditatem (nominative commoditas) meaning "fitness. Our personalized approach enables clients to achieve their Total Investment Objectives. such as petroleum. have many levels of quality. coal. sugar. "commodité". salt. Going further back. ethanol. it came from the French. to benefit or profit. In other words. Sharekhan is a customer focused financial services organization providing a range of investment solutions to our customers. crude oil. Key product offerings are as follows The word commodity came into use in English in the 15th century. "commodities".. Well-established physical commodities have actively traded spot and derivative markets. as we understand the need of transactions to be executed with high speed and reduced time. these are basic resources and agricultural products such as iron ore. General Insurance. or benefit. The Latin root commod. the French word derived from the Latin commoditize Stereos. Going further back. At the same time. to benefit or profit. copper is copper. 12 . it came from the French. Mutual Funds and IPO’s also. It is a product that is the same no matter who produces it. The price of copper is universal. Sharekhan customers have the advantage of trading in all the market segments together in the same window.
Commoditization occurs as a goods or services market loses differentiation across its supply base. nor debt. soybeans. For a commodity market to be established. wheat. were widely traded using standard instruments in the 19th century in the United States. in which they are bought and sold in standardized contracts. It covers physical product (food. rice. These raw commodities are traded on regulated commodities exchanges. History of Evolution of Commodity Markets:The modern commodity markets have their roots in the trading of agricultural products. electricity) markets but not the ways that services. often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. such as generic pharmaceuticals and silicon chips COMMODITY MARKET:Commodity markets are markets where raw or primary products are exchanged. While wheat and corn. stock markets. goods that formerly carried premium margins for market participants have become commodities. This article focuses on the history and current debates regarding global commodity markets. including those of governments. As such. bond markets and currency markets cover those concerns separately and in more depth. there must be very broad consensus on the variations in the product that make it acceptable for one purpose or another. gold and silver. metals. The economic impact of the development of commodity markets is hard to overestimate. aluminum. other basic foodstuffs such as soybeans were only added quite recently in most markets.coffee beans. cattle and pigs. One focus of this article is the relationship between simple commodity money and the more complex instruments offered in the commodity markets. Through the 19th century "the exchanges became effective 13 . can be seen as a commodity. nor investment. Articles on reinsurance markets.
Similarly producer who not intended to deliver his produce to dealer could pass on the same responsibility to someone else. Whereby the producer would agree to sell his produce to the buyer at a future delivery date at an agreed upon price. Due to lack of organized storage facilities. This promoted traders entry in futures market. absence of uniform weighing & grading mechanisms producers often confined to the mercy of dealers discretion." Early history of commodity markets Commodities future trading was evolved from need of assured continuous supply of seasonal agricultural crops. Latter on by making some modifications these contracts transformed in to an instrument to protect involved parties against adverse factors such as unexpected price movements and unfavorable climatic factors. to standardize the trading in rice tickets. So that wheat producers from Mid-west attracted here to sell their produce to dealers & distributors. The price of such contract would dependent on the price movements in the wheat market. These were known as “rice tickets”. This kind of agreement proved beneficial to both of them. in advance. and innovators of. In 19th century Chicago in United States had emerged as a major commercial hub. which paved the way to expanded interstate and international trade. these rice tickets become accepted as a kind of commercial currency. Latter on rules came in to being. In Japan merchants used to store Rice in warehouses for future use. he could sell his contract to someone who needs the same.spokesmen for. Gradually sellers & buyers started making commitments to exchange the produce for cash in future and thus contract for “futures trading” evolved. But one can trace its roots in Japan. Eventually. In this way producer was aware of what price he would fetch for his produce and dealer would know about his cost involved. and financing. in 1848. which had no intentions 14 . warehousing. As if dealer is not interested in taking delivery of the produce. These situations lead to need of establishing a common meeting place for farmers and dealers to transact in spot grain to deliver wheat and receive cash in return. To raise cash warehouse holders sold receipts against the stored rice. improvements in transportation. The concept of organized trading in commodities evolved in Chicago.
This created a platform for establishment of a body to regulate and supervise these contracts. any commodity can be traded. and the New York Hide Exchange. the New York Mercantile Exchange. The largest commodity exchange in USA is Chicago Board of Trade. In 1872. Trading of wheat in futures became very profitable which encouraged the entry of other commodities in futures market. Cotton and Produce Exchanges were born. the Commodity Exchange. Japan. the Rubber Exchange of New York. the value of global physical exports of commodities increased by 17% while the notional value outstanding of commodity OTC derivatives increased more than 500% and commodity derivative trading on exchanges more than 200%. Singapore. The Chicago Mercantile Exchange. the New York Commodity Exchange and New York Coffee. a group of Manhattan dairy merchants got together to bring chaotic condition in New York market to a system in terms of storage. France. Inc.The notional value outstanding of banks’ OTC commodities’ derivatives contracts increased 27% 15 . In 1870 and 1880s the New York Coffee.The commodities markets have seen an upturn in the volume of trading in recent years. pricing. In 1933. and transfer of agricultural products. Worldwide there are major futures trading exchanges in over twenty countries including Canada. Size of the market The trading of commodities consists of direct physical trading and derivatives trading. sugar and cocoa Exchange.to buy or sell wheat but would purely speculate on price movements in market to earn profit. India. was established in New York through the merger of four small exchanges – the National Metal Exchange. England. That’s why Chicago Board of Trade (CBOT) was established in 1848. Agricultural commodities were mostly traded but as long as there are buyers and sellers. the National Raw Silk Exchange. In the five years up to 2007. during the Great Depression. Australia and New Zealand.
with higher volume in New York being partially offset by declining volume in Tokyo. plus unbridled speculation in forward markets. Spot trading normally involves visual inspection of the commodity or a sample 16 . farmers are expected to face a sharp drop in crop prices. OTC trading accounts for the majority of trading in gold and silver. energy 29% and industrial metals by 30%. As a result.Global physical and derivative trading of commodities on exchanges increased more than a third in 2007 to reach 1. Over 40% of commodities trading on exchanges was conducted on US exchanges and a quarter in China. Overall. Other commodities. such as steel.in 2007 to $9. down from their 55% share a decade earlier as trading in energy derivatives rose. precious metals accounted for 8% of OTC commodities derivatives trading in 2007.684 million contracts. Returns It is generally agreed that commodities have an expected return of 5% in real terms which is based on the risk premium for 116 different commodities weighted equally since 1888 (Source Report 219171-Wharton Business School).for everything from coal to corn – was fueled by heated demand from the likes of China and India. Trading on exchanges in China and India has gained in importance in recent years due to their emergence as significant commodities consumers and producers. Agricultural contracts trading grew by 32% in 2007. or with a minimum lag between the trade and delivery due to technical constraints. Recent Trends in Commodities The 2008 global boom in commodity prices . Spot trading Spot trading is any transaction where delivery either takes place immediately. Precious metals trading grew by 3%. after years of record revenue. are also expected to tumble due to lower demand. That bubble popped in the closing months of 2008 across the board. Investment professionals often too mistakenly claim there is no risk premium in commodites.0 trillion.
of the commodity, and is carried out in markets such as wholesale markets. Commodity markets, on the other hand, require the existence of agreed standards so that trades can be made without visual inspection.
A forward contract is an agreement between two parties to exchange at some fixed future date a given quantity of a commodity for a price defined today. The fixed price today is known as the forward price.
Futures contracts:A Commodity futures is an agreement between two parties to buy or sell a specified and standardized quantity of a commodity at a certain time in future at a price agreed upon at the time of entering into the contract on the commodity futures exchange. The need for a futures market arises mainly due to the hedging function that it can perform. Commodity markets, like any other financial instrument, involve risk associated with frequent price volatility.
Benefits of Commodity Futures Markets:The primary objectives of any futures exchange are authentic price discovery and an efficient price risk management. The beneficiaries include those who trade in the commodities being offered in the exchange as well as those who have nothing to do with futures trading. It is because of price discovery and risk management through the existence of futures exchanges that a lot of businesses and services are able to function smoothly.
Price Discovery:- Based on inputs regarding specific market
information, the demand and supply equilibrium, weather forecasts, expert views and comments, inflation rates, Government policies, market dynamics, hopes and fears, buyers and sellers conduct trading at futures exchanges. This transforms in to continuous price discovery mechanism. The execution of trade between buyers and sellers leads to assessment of fair value of a particular commodity that is immediately disseminated on the trading terminal.
Price Risk Management: - Hedging is the most common method
of price risk management. It is strategy of offering price risk that is inherent in spot market by taking an equal but opposite position in the futures market. Futures markets are used as a mode by hedgers to protect their business from adverse price change. This could dent the profitability of their business. Hedging benefits who are involved in trading of commodities like farmers, processors, merchandisers, manufacturers, exporters, importers etc.
Import- Export competitiveness: - The exporters can hedge
their price risk and improve their competitiveness by making use of futures market. A majority of traders which are involved in physical trade internationally intend to buy forwards. The purchases made from the physical market might expose them to the risk of price risk resulting to losses. The existence of futures market would allow the exporters to hedge their proposed purchase by temporarily substituting for actual purchase till the time is ripe to
buy in physical market. In the absence of futures market it will be meticulous, time consuming and costly physical transactions.
Predictable Pricing: - The demand for certain commodities is
highly price elastic. The manufacturers have to ensure that the prices should be stable in order to protect their market share with the free entry of imports. Futures contracts will enable predictability in domestic prices. The manufacturers can, as a result, smooth out the influence of changes in their input prices very easily. With no futures market, the manufacturer can be caught between severe short-term price movements of oils and necessity to maintain price stability, which could only be possible through sufficient financial reserves that could otherwise be utilized for making other profitable investments.
Benefits for farmers/Agriculturalists: - Price instability has a
direct bearing on farmers in the absence of futures market. There would be no need to have large reserves to cover against unfavorable price fluctuations. This would reduce the risk premiums associated with the marketing or processing margins enabling more returns on produce. Storing more and being more active in the markets. The price information accessible to the farmers determines the extent to which traders/processors increase price to them. Since one of the objectives of futures exchange is to make available these prices as far as possible, it is very likely to benefit the farmers. Also, due to the time lag between planning and production, the market-determined price information disseminated by futures exchanges would be crucial for their production decisions.
Credit accessibility: - The absence of proper risk management
tools would attract the marketing and processing of commodities to high-risk exposure making it risky business activity to fund. Even a small movement in prices can eat up a huge proportion of capital owned by traders, at times making it virtually impossible to payback the loan. There is a high degree of reluctance
would cut down the discount rate in commodity lending. raw jute and jute goods in Calcutta (1912). about a decade after they started in Chicago. which is possible through futures markets. 7. Over the time datives market developed in several commodities in India. This posses a huge obstacle in the smooth functioning and competition of commodities market. especially those who do not manage price risks. The act prohibited options trading in Goods along with cash settlement of forward trades. Improved product quality: .among banks to fund commodity traders. which regulated contracts in Commodities all over the India. The act 20 . Following Cotton. rendering a crushing blow to the commodity derivatives market. derivatives trading started in oilseed in Bombay (1900). It ensures uniform standardization of commodity trade. History of Commodity Market in India The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875. Hedging. Under the act only those associations/exchanges. including the terms of quality standard: the quality certificates that are issued by the exchange-certified warehouses have the potential to become the norm for physical trade. resulting in to banning of commodity options trading and cash settlement of commodities futures after independence in 1952. Wheat in Hapur (1913) and Bullion in Bombay (1920). If in case they do.The existence of warehouses for facilitating delivery with grading facilities along with other related benefits provides a very strong reason to upgrade and enhance the quality of the commodity to grade that is acceptable by the exchange. The parliament passed the Forward Contracts (Regulation) Act. 1952. However many feared that derivatives fuelled unnecessary speculation and were detrimental to the healthy functioning of the market for the underlying commodities. the interest rate is likely to be high and terms and conditions very stringent. are allowed to organize forward trading in regulated commodities. which are granted reorganization from the Government.
and certain amendments to Forward Contracts (Regulation) Act 1952. After Liberalization and Globalization in 1990. It also recommended strengthening Forward Markets Commission. at a grassroots level. commodity exchanges are purely speculative in nature. end-users. and no one can offer to sell higher than someone else’s lower offer. no one can bid under a higher bid. The Committee (headed by Prof. in a complete change in a policy. It is timely decision since internationally the commodity cycle is on upswing and the next decade being touched as the decade of Commodities. Ministry of Consumer Affairs. in an organized way. A big difference between a typical auction. they reach to the producers. It brings a price transparency and risk management in the vital market. started actively encouraging commodity market. (iii) The Central Government. The commodities future market remained dismantled and remained dormant for about four decades until the new millennium when the Government. Before discovering the price. number of commodities allowed for derivatives trading as well as the value of futures 21 . That keeps the market as efficient as possible. Kabra) recommended allowing futures trading in 17 commodity groups. By Exchange rules and by law. K. Commodity exchange in India plays an important role where the prices of any commodity are not fixed. the commodities future market in India has experienced an unexpected boom in terms of modern exchanges. where a single auctioneer announces the bids and the Exchange is that people are not only competing to buy but also to sell. and even the retail investors. and keeps the traders on their toes to make sure no one gets the purchase or sale before they do. Today. Food and Public Distributionis the ultimate regulatory authority. particularly allowing option trading in goods and registration of brokers with Forward Markets Commission. Earlier only the buyer of produce and its seller in the market judged upon the prices.envisages three tire regulations: (i) Exchange which organizes forward trading in commodities can regulate trading on day-to-day basis. The Government accepted most of these recommendations and futures’ trading was permitted in all recommended commodities. Since 2002.Department of Consumer Affairs. the Government set up a committee (1993) to examine the role of futures trading. Others never had a say.N. (ii) Forward Markets Commission provides regulatory oversight under the powers delegated to it by the central Government.
Government of India has allowed forward transactions in commodities through Online Commodity Exchanges. except some negligible activities on OTC basis. All the exchanges have been set up under overall control of Forward Market Commission (FMC) of Government of India. Commission consists of minimum two and maximum four members appointed by Central Govt. Out of these members there is one nominated chairman.existent. Multi Commodity Exchange of India Limited (MCX) Mumbai and National Multi-Commodity Exchange of India Limited (NMCEIL) Ahmedabad. a modification of traditional business known as Adhat and Vayda Vyapar to facilitate better risk coverage and delivery of commodities. which comes under the Ministry of Consumer Affairs Food and Public Distribution Forward Markets Commission (FMC):It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act. which crossed $ 1 trillion mark in 2006.trading in commodities. After a gap of almost three decades. situated at Mumbai. There are other regional commodity exchanges situated in different parts of India. of which there are three national level multi-commodity exchanges. 22 . 1952 and the Rules framed there under. The regulator for the commodities trading is the Forward Markets Commission. The three exchanges are: National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai. Since 1952 till 2002 commodity datives market was virtually non. 1952. Legal framework for regulating commodity futures in India:The commodity futures traded in commodity exchanges are regulated by the Government under the Forward Contracts Regulations Act. In India there are 25 recognized future exchanges.
The East India Cotton Association. The Meerut Agro Commodities Exchange Co.. Vijay Beopar Chamber Ltd. Kochi 10. Hapur 13.Commodity exchanges in India What is a commodity exchange? A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority. The Kanpur Commodity Exchange Ltd. List of Exchanges in India:- 1. Mumbai 3. Ltd. Bhatinda Om & Oil Exchange Ltd. The Spices and Oilseeds Exchange Ltd. India Pepper & Spice Trade Association. Rajdhani Oils and Oilseeds Exchange Ltd.. Muzaffarnagar 9. Batinda. 7. Ahmedabad Commodity Exchange 8. The Chamber Of Commerce. The Bombay Commodity Exchange Ltd. Meerut 6. Indore 12.. Delhi 11... Kanpur 5.. 2. Mumbai 23 . National Board of Trade. The Rajkot Seeds oil & Bullion Merchants` Association Ltd 4.
. Kochi 17. Surendranagar Cotton oil & Oilseeds Association Ltd 22. National Commodity & Derivatives Exchange Ltd 24. The Coffee Futures Exchange India Ltd. NCDEX and NMCEIL are the major Commodity Exchanges.14. e-Commodities Ltd Of these 25 commodities exchanges the MCX. Bikaner Commodity Exchange Ltd. The East India Jute & Hessian Exchange Ltd. 24 . First Commodity Exchange of India Ltd. 16. The Central India Commercial Exchange Ltd. Bangalore 19. Haryana Commodities Ltd.. Esugarindia Limited 20.. Bikaner 18. Multi Commodity Exchange of India Ltd 23. National Multi Commodity Exchange of India Limited 21. Gwalior 15. Hissar 25.
Indian Farmers Fertilizer Cooperative Limited (IFFCO). Canara Bank and Goldman Sachs by subscribing to the equity shares have joined the promoters as a share holder of exchange. Contracts Act. 25 . Stamp Act. NCDEX is a public limited company incorporated on 23 April 2003. Punjab National Bank (PNB).NCDEX (National Commodities & Derivatives Exchange Limited) National Commodities & Derivatives Exchange Limited (NCDEX) promoted by ICICI Bank Limited (ICICI Bank). NCDEX is a national level technology driven on line Commodity Exchange with an independent Board of Directors and professionals not having any vested interest in Commodity Markets. NCDEX is regulated by Forward Markets Commission (FMC). Forward Contracts Regulation Act and various other legislations. NCDEX is located in Mumbai and offers facilities to its members in more than 550 centers through out India. professionalism and transparency. It is committed to provide a world class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices. Credit Ratting Information Service of India Limited (CRISIL). National Bank of Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSC). NCDEX is the only Commodity Exchange in the country promoted by national level institutions. NCDEX is also subjected to the various laws of land like the Companies Act. Life Insurance Corporation of India (LIC). NCDEX currently facilitates trading of 57 commodities.
Caster seed. Cotton. Yellow Electrolytic Copper Cathode. Cotton. Mustard seeds. Oil cake. Chana. Mustard seeds. Masoor. Meal • Pulses:Urad. Brent • Minerals:Electrolytic Copper Cathode. Oil cake. RBD Pamolein seed oil cake.Commodities Traded:Commodities Traded at NCDEX:• Bullion:Gold KG. Turmeric. Refined soya oil. Groundnut expeller Oil. Caster seed. Indian parboiled Rice (IR36/IR-64). Crude Palm Oil. Zinc Metal Ingot. Mild steel Ingots Cotton seed. Yellow peas. Mentha oil.soybean. Nickel Cathode. Groundnut (in shell). Zinc Metal Ingot. Silver. Refined soya oil. Yellow red maize • Spices:Jeera. Cathode. Aluminum Ingot. Crude Palm Oil. Mild steel Ingots • Oil and Oil seeds:Cotton seed. Tur. Rape seeds. Mentha oil. Groundnut (in shell). Yellow . • Grain:\Wheat. Indian raw Rice (ParmalPR-106). Rape seeds. Aluminum Ingot. Barley. Pepper 26 . RBD Pamolein seed oil cake. Groundnut expeller Oil. Indian Pusa Basmati Rice.
from simple snacks like bhaji where the chilis are dipped in batter and fried. but with small amounts of cayenne added for heat. dried and powdered. it is often made from the Mexican chile ancho variety. Guar. Indian cooking has multiple uses for chilis. smoked red (ripe) jalapeños. Indian 28 mm cotton. Jute sacking bags. The soaked and dried chillies are a seasoning ingredient in recipes such as kootu. . Green Cottons. garlic and oregano is often known as chili powder. Sugar. In the United States. V-797 Kapas. 27 . "odanam" rice in Sanskrit) or Thayir sadam (curd rice) or Daal Rice (rice with lentils). Medium Staple. Furnace oil (NCDEX currently facilitates trading of 57 commodities) Agro-based major commodities:– Chilli:Chili is sold worldwide fresh. Coffee Arabica. Chilli LCA334 • Energy:Crude Oil. Potato. Guar seeds. Chilis are dried. to wonderfully complex curries. In the Southwest United States. Lemon. Chipotles are dry. Raw Jute. cumin. roasted and salted as a side dish for rice varieties such as dadhyodanam ("dadhi" curd.• Plantation:Cashew. dried ground chili peppers. . Mulberry. Mulberry raw Silk. It is called "mirapa" (మరప)in telugu. Coffee Robusta • Fibers and other:Guar Gum. Grain Bold. Indian 31mm cotton.
diuretic. Mexico. cultivated mostly in the Kabuli. Mexico and Central America. Ethiopia. containing 1 to 4 seeds. which has small. mainly Indian subcontinent. Northern Africa. Jeera:Cuminseed (Jeera) is a native of the Levant and Upper Egypt. each leaflet 1 to 7 cm (⅜ to 2¾ in) long and 1 to 3 cm (⅜ to 1 inch) broad. or groundnut (Arachis hypogaea). The leaves are opposite. diarrhoea and hoarseness. Afghanistan. darker seeds and a rough coat. especially India. After pollination. which forces its way underground to mature. carminative. and Chile. China and the Americas.5 ft) tall. the fruit develops into a legume 3 to 7 cm (1 to 2 in) long. no terminal leaflet).  It is an annual herbaceous plant growing to 30 to 50 cm (1 to 1. is a species in the legume family (Fabaceae) native to South America. and Iran. emmenagogic and antispasmodic. It is a widely used spice in India. 28 . North Africa. Now it is grown mainly in hot countries. yellow with reddish veining. It is valuable in dyspepsia. pinnate with four leaflets (two opposite pairs. also introduced during the 18th century to the Indian subcontinent. 2 to 4 cm (¾ to 1½ in) across.Chana:There are two main kinds of chana:• Desi. which has lighter coloured. The flowers are a typical peaflower in shape. and may relieve flatulence and colic. stimulant. astringent. Cumin is stomachic. larger seeds and a smoother coat. • grown in Southern Europe. Groundnut (in shell):The peanut.
then the current FUTEXAGRI value should be the no-arbitrage value for the index futures. This is a spot-price based index. staple fiber that grows in a form known as a boll around the seeds of the cotton plant. It indicates. called NCDEXAGRI that convers 20 commodities currently being offered for trading by NCDEX. This is a composite index. the index futures. The fiber most often is spun into yarn or thread and used to make a soft. called FUTEXAGRI. Hence.Indian 28 mm Cotton:Cotton is a soft. which is the most widely used natural-fiber cloth in clothing today. including the Americas. Facilities offered:NCDEX also offers as an information product. This is essentially a what-if index. breathable textile. India and Africa. NCDEX also offers as an information product. these are only available for information. that if futures on the index could be traded. a shrub native to tropical and subtropical regions around the world. indexes and index futures are not allowed to be traded under the current regulatory structure. However. MCX 29 . as of now. an agricultural commodity index.
42 MCX has 10 strategic alliances with leading commodity exchange across the The average daily turnover of MCX is about US$ 2. Bullion.000 trading terminals • index . no. Ferrous & Nonferrous metals. It is now regulated by forward market commission. no. Plantations. The turnover of the exchange for the period Apr-Dec 2008 was INR 32 Trillion . • MCX is India's No. MCX has also setup in joint venture the National Spot Exchange a purely agricultural commodity exchange and National Bulk Handling Corporation (NBHC) which provides bulk storage and handling of agricultural products. Oils & Oilseeds. It was established in 2003 and is based in Mumbai. MCX ranks no.4 billion  MCX now reaches out to about 500 cities in India with the help of about MCX COMDEX is India's first and only composite commodity futures price 2008($0. 1 in silver.84 trillion)  • Ltd () • gold in futures trading () • • Trillion ($29 Billion). 3 in crude oil and The crude volume touched 23.(Multi Commodity Exchange) Multi Commodity Exchange (MCX) is an independent commodity exchange based in India. 2009 The highest traded item is gold with an average monthly turnover of Rs 1.49 Miliion barrels  on January 3. 30 . Energy. 2 in natural gas. Pulses. MCX offers futures trading in Agricultural Commodities. • globe • • 10. 1 commodity exchange with 84% Market share in The exchange's competitor is National Commodity & Derivatives Exchange Globally. Spices and other soft commodities.
Coconut Oil. Zinc FIBER ENERGY Gold. Kapasia Khalli. Soy Seeds CEREALS OTHERS Guargum.METAL BULLION Aluminium. Jeera. Tin. Silver M Cotton L Staple. Rubber PETROCHEMICALS HDPE. ATF. Cotton Seed. Kapas SPICES Brent Crude Oil. Polypropylene(PP). Sugar S-30 31 . Coconut Cake. Silver HNI. M. Crude Oil. Mustard Seed (Jaipur). Lead. Gold M. Soymeal. Masur. Maize Mentha Oil. Gold HNI. E. Castor Seeds. Mustard Oil. Furnace Oil. Coffee (Robusta). Rice Bran DOC. Potato (Agra). Sugar M30. Soy Bean. Groundnut Oil. Steel Flat. Rice Bran Refined Oil. i-gold. Silver. Pepper. Sesame Seed. PVC Castor Oil. Mustard Seed (Sirsa). Sponge Iron. Electricity. Cashew Kernel. Red Chilli PULSES Chana. Steel Long (Bhavnagar). Guar Seed. Potato (Tarkeshwar). Copper. Steel Long (Govindgarh). Refined Sunflower Oil. Sour Crude Oil. Carbon Credit PLANTATIONS Cardamom. Natural Gas. RBD Palmolein. Gurchaku. Cotton S Staple. Yellow Peas OIL & OIL SEEDS Arecanut. Crude Palm Oil. Refined Soy Oil. Cotton Yarn. Cotton M Staple. Nickel.
Therefore." 32 .) Major commodities traded:- Gold:Gold is the oldest precious metal known to man. we should review why the world reveres what England's most famous economist. John Maynard Keynes. cynically called the "barbarous relic.000 years of experience say " gold is forever". It is the opinion of the more objective market experts that the traditional investment vehicles of stocks and bonds are in the areas of their all-time highs and may be due for a severe correction.(MCX deals wit about 100 commodities. it is a timely subject for several reasons. To fully appreciate why 8.
industrial uses.Less than one third of gold's total accumulated holdings is as a 'commodity' for Jewellery in Western markets and usage in industry. India is the world's largest gold consumer with an annual demand of 800 tons. photography and Jewellery & silverware accounting for 342. 205 and 259 million ounces respectively in 2002. other major institutions and retail Jewellery keep coming back to the market. More than two thirds of gold's total accumulated holdings account as 'value for investment' with central bank reserves. Due to large stocks of Gold as against its demand. we think that the more pragmatic ancient Egyptians were perhaps more accurate in observing that gold's value was a function of its pleasing physical characteristics and its scarcity. However. Gold is primarily a monetary asset and partly a commodity. the first.South Africa is the world's largest gold producer with 394 tons in 2001. followed by US and Australia. private players and high-carat Jewellery. it is argued that the core driver of the real price of gold is stock equilibrium rather than flow equilibrium. The third largest is 33 . Silver:- Silver's unique properties make it a very useful 'Industrial Commodity'. second and fourth largest producing countries.Just over half of mined silver comes from Mexico.Demand for silver is built on three main pillars.Why gold is "good as gold" is an intriguing question.The Gold market is highly liquid and gold held by central banks. despite it being classed as a precious metal. Peru and United States. respectively.
Primary mines produce about 27 percent of world silver. and zinc mining. It then locates and matches the best counter-offers/bids by maintaining anonymity of the counter-parties. When an order is placed on the exchange. NMCX (National Multi-Commodity Exchange of India Limited) The first De-Mutualised Electronic Multi-Commodity Exchange of India granted the National status on a permanent basis by the Government of India and operational since 26th November 2002. provided by CMC.The price of silver is not only a function of its primary output but more a function of the price of other metals also. Derivative Trading Settlement System (DTSS). as world mine production is more a function of the prices of other metals. 34 .Australia. while around 73 percent comes as a by-product of gold. lead. copper.Often a faster growth in demand against supply leads to drop in stocks with government and investors.NMCE facilitates electronic derivatives trading through robust and tested trading platform. the server at NMCE scans through the orders posted on it from all its trading terminals.
Gold Study . Castor Seed.Turmeric Wheat Major commodity traded:Coffee:- 35 . Coconut Oil & Coconut Oil cake .Anonymity helps is eliminating formation of cartels and other unfair practices.Sacking .Soy Seed.Rape/Mustard Seed. The contracts are marked to market on daily basis. Rubber .Coffee . Isabgul Seed . oil & oil cake . NMCE follows best international risk management practices. Oil & Oil cake .Menthol Crystal .Sesame Seed Silver Study . an imperative in the commodity trading business. These deliveries are executed through a sound and reliable Warehouse Receipt System.Lin Seed .Copra. NMCE was the first commodity exchange to provide trading facility through internet. thereby protecting the efficiency of price-discovery at the Exchange. Well-capitalized in-house clearinghouse assumes counter-party risk of settlement. Oil & Oilcake . NMCE was the first to initiate process of dematerialization and electronic transfer of warehoused commodity stocks.Pulses . The unique strength of NMCE is its settlements via a Delivery Backed System.Salient features of Oil . In the event of high volatility in the prices. NMCE has also set up a Trade Guarantee Fund. through Virtual Private Network (VPN). Chana .Raw Jute. Guar SeedS.Cuminseed . The system of upfront margining based on Value at Risk is followed to ensure financial security of the market. Oil & Oil cake . special intra-day clearing and settlement is held. List of Commodity traded:Cardamom .Sugar .Groundnut seed.Pepper .Safflower seed .Sunflower seed . leading to guaranteed clearing and settlement.
Brazil. and to the Americas. It is a primary trading forum for energy products and precious metals. Natural Gas. Silver. Persia. Heating Oil. From there. when it was discovered in the highlands of Ethiopia. which trades in all the other metals. Coffee was first consumed in the ninth century. Platinum. Australia. commonly called coffee beans. to Indonesia. of the coffee plant. From the Muslim world. United Kingdom.Coffee is a brewed beverage prepared from roasted seeds. Aluminum. coffee spread to Italy. the NYMEX division. it spread to Egypt and Yemen. 36 . The United States. Turkey. and by the 15th century. Palladium. Gold. had reached Armenia. Due to its caffeine content. Commodities traded: . and northern Africa. Today. then to the rest of Europe. which deals in energy and platinum and the COMEX division. Electricity Propane. RBOB Gasoline. Copper. Japan. etc. The exchange is in existence since last 132 years and performs trades trough two divisions. coffee is one of the most popular beverages worldwide. The New York Mercantile Exchange (NYMEX):The New York Mercantile Exchange is the world’s biggest exchange for trading in physical commodity futures.Light sweet crude oil. coffee has a stimulating effect in humans. INTERNATIONAL COMMODITY EXCHANGES Futures’ trading is a result of solution to a problem related to the maintenance of a year round supply of commodities/ products that are seasonal as is the case of agricultural produce. Singapore are homes to leading commodity futures exchanges in the world. Gasoline.
Oil. Lead. wheat. The exchange was formed in 1877 as a direct consequence of the industrial revolution witnessed in the 19th century. Commodities traded:. The exchange trades 24 hours a day through an inter office telephone market and also through a electronic trading platform. Tin. More than 50 contracts on futures and options are being offered by CBOT currently through open outcry and/or electronically. Aluminum Alloy. North American Special Aluminum Alloy (NASAAC). Nickel. Soybean meal. Ethanol. The primary focus of LME is in providing a market for participants from nonferrous based metals related industry to safeguard against risk due to movement in base metal prices and also arrive at a price that sets the benchmark globally.Corn. Oats. Presently. with highly liquid contracts. Soybean.London Metal Exchange:The London Metal Exchange (LME) is the world’s premier non-ferrous market. Commodities Traded: . Polypropylene.Aluminum. Gold. the Chicago Board of Trade is one of the leading exchanges in the world for trading futures and options. Linear Low Density Polyethylene. Zinc. Rough Rice. It is famous for its open-outcry trading between ring dealing members that takes place on the market floor. 37 . Wheat. etc. Copper. Silver etc. The Chicago Board of Trade:The first commodity exchange established in the world was the Chicago Board of Trade (CBOT) during 1848 by group of Chicago merchants who were keen to establish a central market place for trade. non storable agricultural commodities and non-agricultural products like gold and silver. CBOT initially dealt only in Agricultural commodities like corn.
The broker 38 . The first is the spot trade. by when the buyer or seller either closes (square off) his account or give/take delivery of the commodity. etc How Commodity market works? There are two kinds of trades in commodities. Silver. Gold.Tokyo Commodity Exchange (TOCOM):The Tokyo Commodity Exchange (TOCOM) is the second largest commodity futures exchange in the world. Rubber. Kerosene. TOCOM fortified its clearing system in June by being first commodity exchange in Japan to introduce an in-house clearing system. But some one trading in commodity futures need not necessarily posses such a receipt to strike a deal. in which one pays cash and carries away the goods. A person deposits certain amount of say. that drives NYMEX is different from demand-supply situation in Asia. Futures have something called an expiry date. In Jan 2003. It has made rapid advancement in commodity trading globally since its inception 20 years back. in a major overhaul of its computerized trading system. the first option contract in Japanese market.S. Commodities traded: . Which allows him to ask for physical delivery of the good from the warehouse.Gasoline. Crude Oil. It trades in to metals and energy contracts. Platinum. A person can buy or sale a commodity future on an exchange based on his expectation of where the price will go. Aluminum. The underpinning for futures is the warehouse receipt. TOCOM’s recent tie up with the MCX to explore cooperation and business opportunities is seen as one of the steps towards providing platform for futures price discovery in Asia for Asian players in Crude Oil since the demand-supply situation in U. TOCOM launched options on gold futures. The second is futures trade. One of the biggest reasons for that is the initiative TOCOM took towards establishing Asia as the benchmark for price discovery and risk management in commodities like the Middle East Crude Oil. in May 2004. good X in a ware house and gets a warehouse receipt.
At this stage the following is the system implemented. Today Commodity trading system is fully computerized.Matching 39 . the seller should be able to deposit the commodity at warehouse nearest to him and collect the warehouse receipt.Order receiving .Reporting . With online commodity trading they could sit in the confines of their home or office and call the shots.Position limits II. The commodity trading system consists of certain prescribed steps or stages as follows: I.Matching . But at present in India very few warehouses provide delivery for specific commodities.maintains an account of all dealing parties in which the daily profit or loss due to changes in the futures price is recorded. For commodity futures to work. Traders need not visit a commodity market to speculate.This stage has following system in place. Trading: .Execution . Following diagram gives a fair idea about working of the Commodity market.Surveillance .Price limits . Clearing: . The buyer should be able to take physical delivery at a location of his choice on presenting the warehouse receipt. Squiring off is done by taking an opposite contract so that the net outstanding is nil.
the member will ask for identity proof. III. The investor can ask for the details from the Commodity Exchanges about the list of approved members.Price limits .Delivery upon expiration or maturity..Notation .This stage has following system followed as follows.Margining .Clearing limits .Marking to market . For which Xerox copy of any one of the following can be given a) b) c) d) PAN card Number Driving License Vote ID Passport 40 . How to invest in a Commodity Market? With whom investor can transact a business? An investor can transact a business with the approved clearing member of previously mentioned Commodity Exchanges. What is Identity Proof? When investor approaches Clearing Member.Reporting . Settlement: .Position limits .Registration .Receipts and payments .Clearing house.Clearing .
The references. What are the other forms to be signed by the investor? The clearing member will ask the client to sign a) b) Know your client form Risk Discloser Document The above things are only procedure in character and the risk involved and only after understanding the business.back office functioning being most Credit facility. The number of franchises/branches.What statements should be given for Bank Proof? The front page of Bank Pass Book and a canceled cheque of a concerned bank. Otherwise the Bank Statement containing details can be given. These factors include • • • • • • • • Net worth of the broker of brokerage firm. What are the particulars to be given for address proof? In order to ascertain the address of investor. The market credibility. 41 important. What aspects should be considered while selecting a commodity broker? While selecting a commodity broker investor should ideally keep certain aspects in mind to ensure that they are not being missed in any which way. The clientele. . The research team. the clearing member will insist on Xerox copy of Ration card or the Pass Book/ Bank Statement where the address of investor is given. he wants to transact business. The kind of service provided.
He should be Graduate or having equivalent qualification.These are amongst the most important factors to calculate the credibility of commodity broker. How to become a Member of Commodity Exchange? To become member of Commodity Exchange the person should comply with the following Eligibility Criteria. This sum has been determined by Multi Commodity Exchange. How to become a Commodity Trader/Broker of Commodity Exchange? To become a commodity trader one needs to complete certain legal and binding obligations. Broker:The Broker is essentially a person of firm that liaisons between individual traders and the commodity exchange. 50 Lakh. 1. A broker of Commodities is also required to meet certain obligations to gain such a membership in exchange. 3. In other words the Commodity Broker is the member of Commodity Exchange. 4. To become a member of Commodity Exchange the broker of brokerage firm should have net worth amounting to Rs. 2. which is stated by a unit of Government that lays down the laws and acts with regards to commodity trading. He should be Citizen of India. 5. He should not be bankrupt. There is routine process followed. having direct connection with the exchange to carry out all trades legally. 42 . He is also known as the authorized dealer. He should have completed 21 years of his age. He has not been debarred from trading in Commodities by statutory/regulatory authority.
Incidentally the futures’ trends of these commodities are mainly driven by international futures prices rather than the changes in domestic demand-supply and hence. It employees around 57% of the labor force on total of 163 million hectors of land Agriculture sector is an important factor in achieving a GDP growth of 8-10%. Silver. Agriculture contributes about 22% GDP of Indian economy. though there are about 100 commodities traded on MCX. Coming to trade pattern. Trends in volume contribution on the three National Exchanges:Pattern on Multi Commodity Exchange (MCX):MCX is currently largest commodity exchange in the country in terms of trade volumes. only 3 or 4 commodities contribute for more than 80 percent of total trade volume. in addition to being a major consumer of bullion and energy products. further it has even become the third largest in bullion and second largest in silver future trading in the world. As per recent data the largely traded commodities are Gold.Current Scenario in Indian Commodity Market Need of Commodity Derivatives for India:India is among top 5 producers of most of the Commodities. 43 . the price signals largely reflect international scenario. Energy and base Metals. All this indicates that India can be promoted as a major centre for trading of commodity derivatives.
chana and Urad (narrow commodities as specified by FMC). Pattern on National Commodity & Derivatives Exchange (NCDEX):NCDEX is the second largest commodity exchange in the country after MCX. Major volume contributors: . But. However the major volume contributors on NCDEX are agricultural commodities. Pattern on National Multi Commodity Exchange (NMCE):NMCE is third national level futures exchange that has been largely trading in Agricultural Commodities. About 60 percent trade on NCDEX comes from guar seed. Analysis of volume contributions on three major national commodity exchanges reveled the following pattern. which is making them vulnerable to market manipulations and over speculation. in subsequent period. Whose market sizes are considerably small making then vulnerable to manipulations.Among Agricultural commodities major volume contributors include Gur. Trade on NMCE had considerable proportion of commodities with big market size as jute rubber etc.Majority of trade has been concentrated in few commodities that are 44 . Mentha Oil etc. Urad. most of them have common inherent problem of small market size. the pattern has changed and slowly moved towards commodities with small market size or narrow commodities. But.
the operators/speculators chose another commodity and start operating in a similar pattern. may be because they are really busy or may be not interested in the demat accounts and mutual funds. metals and energy) Agricultural commodities with small market size (or narrow commodities) like guar. the speculators are moving from one commodity to other (from methane to Urad to guar etc) where the market could be influenced either individually or with a group.• • Non Agricultural Commodities (bullion. In view of extreme volatilities. They even tell us that we are doing our training (SIP) at very wrong time. Trade strategy:It appears that speculators or operators choose commodities or contracts where the market could be influenced and extreme speculations possible. Mentha etc. When FMC brings restrictions on those commodities. the operators once again move to the other commodities. In this crash many people lost their money amounting from 2 Lakhs to 4-5 crore or even more. SENSEX fell tremendously from 21000 to 15000. So when we approach them they tell us how much they used to trade in shares and how much money they have lost in the share market. Urad. After the Reliance IPO. Consequently. the FMC directs the exchanges to impose restrictions on positions and raise margins on those commodities. LIMITATIONS: Due to bad market conditions people are becoming more and more pessimistic about investing in the share market. Likewise. While telecalling sometimes the clients do not give positive response. 45 .
But clients fail to understand this. While cold calling when we met the owners of big shops. They don`t want to take risk. So it’s very difficult to convince them to deposit that much amount and open a demat account. Sharekhan takes no charges for opening Demat accounts but there is a initial deposit of Rs. some people have very bad experience with Sharekhan in terms of services and charges. They think that these are the charges they start suspecting it.10. There are some negative rumors in the market about Sharekhan ltd. They said that if they had spare money they will invest it in their shops and not in the share market. As soon as the account opens this money can be kept as it is in the demat account or it can be completely used for buying shares or it can be partially used and the rest of the amount can be withdrawn. This may not be the fault of the company but of some of the marketing executives who don`t disclose all the details about charges and products and once the demat account has been opened they don`t pay any attention to their old clients and thus fail to give proper services to the clients. 46 27% Commodity Market . Quantitative Analysis ANALYSIS (Sample size 30 peoples) Other Survey was conducted across Udaipur City to judge the awareness of peoples 7% regarding investment in Commodity Market.D. 23% 1. It is just a margin money which has to be kept with Sharekhan till the account opens.000/-. Investor’s preferences: - 43% Share Market Bank F.
People’s knowledge about Commodity Market: - 47 .81% of total sample) which specified in other category investment and it is greater than share market investment preference. 2.Investment Prefrences specified in other category 3% 30% Real Estate Jwelary Not Specified 67% Analysis of data revels that majority of people prefer investment in Real Estate (28.
who know Commodity Market) Interested 50% 50% Not Interested Though some people heard of commodity market due to lack of complete knowledge about it half of then are not interested in investing in Commodity Market. 3. 48 . Investor’s interested to invest in Commodity Market: - (Out of those.13% Know Don’t Know 87% Very few people heard of commodity market. Vast majority of people are unaware about Commodity Market.
Commodity Market Investors Preferences 13% 20% 37% Bullion Metals Agricultural Fossils/Energy 30% Above data revels that majority of commodity investors like to invest in Bullion (Gold & Silver). 5. Opinion about Commodity Market Advertisements:49 . feel that investment in commodity market is very risky. Perception about Commodity Market:- 25% Less Risky Risky 50% 25% Very Risky Analysis of data shows that majority of people who are aware about commodity market. So efforts should be done to minimize the risk in commodity investment and make peoples about minimum risk in commodity investment.4. 6.
Commodities on hand ready for shipment.Basis is the difference between the cash price of an asset and futures price of the underlying asset.A quick decline in price. . • Basis: .A person who expects prices to go lower. Basis can be negative or positive depending on the prices prevailing in the cash and futures.(Expressed by those who know commodity market) No t Info rmative 100 There is no second opinion amongst commodity investors. ANNEXURE Terms and Definitions related to Commodity Market: • Accruals:. • Bear: • Bid: .An order to buy or sell at the best price possible at the time an order reaches the trading pit. that commodity market advertisements do not give all the necessary information.A bid subject to immediate acceptance made on the floor of exchange . 50 to buy a definite number of futures contracts at a specific price. • Breaking: . storage and manufacture • At the Market: .
which derive their value from an underlying asset. In which case open positions are marked to market on last day of contract based on cash market close.The tender and receipt of actual commodity.The period at the end of trading session officially designated by exchange during which all transactions are considered made “at the close”. (Underlying assets can be equity.These are financial contracts. real estate or any other asset.A concern that buys and sells actual commodities or designated by the exchange as the official close. interest rates.A notice for a clearing member’s intention to deliver a under the terms of futures contract. Some contracts settle in cash (cash delivery).To buy at the beginning of trading session at a price .• Bulging: • Bull: . or in case of agriculture commodities. 51 . • Buy on Close: closing range. in settlement of futures contract. • Delivery month: . • Delivery notice: • Derivatives: stated quantity of commodity in settlement of a short futures position.A person who expects prices to go higher. . foreign exchange. . commodity. the call writer (seller) may be assigned a short position in the underlying futures if the buyer exercises the call. . • Commission house: • Delivery: futures contract for the accounts of customers.Specified month within which delivery may be made .The price (or price range) recorded during the period .To buy at the end of trading session at the price within the . . Derivatives can be traded either in an exchange or over the counter. warehouse receipts covering such commodity. futures. • Close: .A quick increase in price. options and swaps. • Buy on opening: • Call: within the opening range.An option that gives the buyer the right to a long position in the underlying futures at a specific price.) Four types of derivatives are trades forward. • Closing price: .
e. The prices in an exchange are determined in the form of a continuous auction by members who are acting on behalf of their clients. In futures contracts the clearing-house becomes the counter party to each transaction.It is an agreement between two parties to buy or sell a specified and standardized quantity and quality of an asset at certain time in the future at price agreed upon at the time of entering in to contract on the futures exchange. counter party risk is almost eliminated. It is entered on centralized trading platform of exchange. Gold.An investment commodity is generally held for investment purpose.• Exchange: . Standardized contracts ensure that the prices mean the same to everyone in the market.A transaction made in reducing or closing out a long or short position. • Margin: .The maximum daily price change above or below the price close in a specific futures market. Here valuation of Mark-to-Mark position is calculated as per the official closing price on daily basis and MTM margin requirement exists. A regulatory authority and the exchange regulate futures contract. Futures contract is more liquid as it is traded on the exchange. Trading limits may be changed during periods of unusually high market activity.Central market place for buyers and sellers. • Hedging: . • Futures Contract:. Futures contract is generally cash settled but option of physical settlement is available.Cash or equivalent posted as guarantee of fulfillment of a futures contract (not a down payment). which is called novation. 52 . Silver • Limit: . Delivery tendered in case of futures contract should be of standard quantity and quality as specified by the exchange. • Liquidation: .g. but more often used by the trade to mean a reduction or closing out of long position. companies or themselves. Therefore. • Investment Commodities: . It is standardized in terms of quantity as specified by exchange. Contract price of futures contract is transparent as it is available on centralized trading screen of the exchange.Means taking a position in futures market that is opposite to position in the physical market with the objective of reducing or limiting risk associated with price.
• Purchase and sales statement: .The difference between the open contracts long and the open contracts short held in any commodity by any individual or group.The number of “open contracts”. • Open contracts: . • Offer: .An offer indicating willingness to sell at a given price (opposite of bid). as fixed by the rules of a contract market.The difference between high and low price of the futures contract during a given period.Demand for additional funds or equivalent because of adverse price movement or some other contingency.• Margin call: .The maximum fluctuation in price of futures contract permitted during one trading session.An interest in the market in the form of open commodities. • Price limit: . • Settlement price: . repurchase or actual delivery or receipt of commodity.Contracts which have been brought or sold without the transaction having been completed by subsequent sale. • Spot Markets:-Here commodities are physically brought or sold on a negotiated basis. set by the exchange for the purpose of setting margins accounts. • Net position: .A statement sent by FMC to a customer when his futures option has been reduced or closed out (also called ‘P and S”) • Range: . In options. It refers to unliquidated purchases or sales and never to their combined total. • Position: .It gives right but not the obligation to the option owner. which the buyer initially pays to the option writer (seller). • Option: . to buy an underlying asset at specific price at specific time in the future. • Premium: .The price at which the spot or cash commodity is selling on the cash or spot market. 53 . the price of a call or put.The official daily closing price of futures contract. • Spot price: . • Open interest: .The amount by which a given futures contract’s price or commodity’s quality exceeds that of another contract or commodity (opposite of discount).
Commodity Market . NO (If no move to question no. yes. Address: …………………………………………………..D..Questionnaire COMMODITY MARKET (Questionnaire for Investors) Name:-……………………………………………………. Share Market d. c. YES Do you have any investment plan? b. 1. 4) 2.. a. If. where you would like to invest/trade your money? b. Bank F. Other (specify)………………. 54 a. :-………………………………………………. …………………………………………………… Phone No..
skip this question) ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------55 . Other (specify)………………. If NO. NMCE d. Why you prefer specific investment? ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------4. Can’t Say 8.10) 7. NO Are you willing to invest in Commodity Market? (If no move to question no 12) (If in Q. skip this question) a. why? --------------------------------------------------------------------------------------------------------------------------------------------------b. Insufficient income a. why? b. Other (specify)………………. If YES.7 f. YES 6. NCDEX c. f. MCX If yes. Not aware about invest avenues c. Why you prefer specific Commodity Exchange for investment? (if answer to Q. 5. If no. a.3. 2 Commodity Market. Do you aware about Commodity Market? b. a. why? ---------------------------------------------------------------------------------------------------------------------------------------------------(If no move to the Question no. which Commodity Exchange you will prefer for investment? b.
Other (specify) 15. Income Group (Per month) a. What you think Commodity Market Advertisements (hoardings. Fossils/Energy a. 31 years – 40 years e. Occupation a. 2.000/…………………………………………………………………………………… …………………………………………………………………………………… …………………………………………………………………………………… b.000/d. Very Risky 11.20.000/e.9. Business d. Bullion ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------10.000/b. Less Risky b. In which Commodities you will prefer to Invest? And why? b. Above 50 years 14. Govt. Risky c. 41 years – 50 years 56 . YES 12. Above 3. NO 13. Male b. Job b. Below 21 Years c. Below 1. Age Group a. Private Job c. prints etc) are explanatory enough to give needed useful information? a. Gender a. Metals d.60.000 – 2.000 – 3.40.20. Agricultural c. 60. What is your perception about Commodity Market? a. 1.40. 21 years – 30 years d. Female b. Nil c.
There is also an urgent need for an independent regulator for these markets. 57 . The infrastructure facilities like warehouses. transportation etc. Apart for these more products like Commodity Options need to be introduced. It should be given a helping hand by the concerned authorities to increase its depth. professional agency like Forwards Market Commission (FMC) needs to be at the helm. Instead of bureaucratic Ministry of Consumer Affairs & Food. This may also control speculation to an extent. This will further help deepen the market & would help in increasing the popularity of such exchanges.…………………………………………………………………………………… ………………………. Conclusions Commodity market in India is still in a nascent stage. This will finally lead to a wider investor base & lesser power in the hands of ruthless traders & speculators. should be improved so that the genuine buyers can take physical delivery of goods instead of settling transaction in cash.
and submit to a broad regime of reforms that amount to a hedge against being isolated. There are signs. industrial policy. were they to fail to join the WTO.many nations hedging on a global scale against each other's anticipated protectionism. I believe. Good perspective for earnings. there is a bright future ahead for the Futures Market. 1.jobs. U. The need for stable currency and predictable clearing and rules-based handling of trade disputes. accept IMF rules.Taking these few but firm steps.S. join the WTO. trade sanctions against Canadian softwood lumber (within NAFTA) and foreign steel (except for NAFTA partners Canada and Mexico) in 2002 signalled a shift in policy towards a tougher regime perhaps more driven by political concerns . Recommendations And Suggestions: Developing countries (democratic or not) have been moved to harden their currencies. however. even sustainable forestry and logging practices. 58 . has led to a global trade hegemony . that this regime is far from perfect. China's entry into the WTO signalled the end of truly isolated nations entirely managing their own currency and affairs.
2. Training programme should be organized .com • http://www.commoditiescontrol.mcxindia.com/markets/commodity/ • http://www. Having good Career Scope.com • www. This Should be promoted and awareness should be among public.sharekhan.indiamart. 4.in • http://finance.ncdex.com • http://www. 3. BIBLIOGRAPHY • http://commodities.com 59 .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.