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For the Partial Fulfillment of M.B.A. Programme Of Rajasthan Technical University, Kota(Raj.) (2007-2009)
Anup.S.Daultani Pacific Institute of Management (PIM)
(Affiliated to Rajasthan Technical University & approved by AICTE) Post box no. 12 Pratapnagar extension, airport road, Udaipur-313001 Email:email@example.com Website: www.pimanagement.org
I would like to express my gratitude to all those who gave me opportunity to complete this project. I would like to thank Operations Department of Unicon Investment Solutions for giving me permission to conduct our research work. I have further more to thank Mr Malay Shah(Vice President), Mr Biren Mehta(Business Head, Commodity, Gujrat) for encouraging me to go head with my project. I would also like to thank Mr. Sunil Parmar (Relationship Manager), Mr. Ankit Patel (Dealer) and all staff members for their stimulating support. I am deeply indebted to my college director Prof. B.P.Sharma Prof. G, M. K. Madnani, Asso.Prof. Shankar Chaudhary, Asso.Prof. Shivom Singh and all the faculty members whose help, stimulating suggestions and encouragement helped me in completing my project. My colleagues in the project supported me in my project work. I want to thank them for all their help, support, interest and their valuable hints. In the end I wish to thank all those whose names have not been mentioned above, but who have directly or indirectly helped in various ways in successful carrying out this project.
This report is the outcome of the study for internal project during 2007-09 session and has been produced for partial fulfillment of the degree of MASTER OF BUSINESS ADMINISTRATION from PACIFIC INSTITUTE OF MANAGEMENT (Affiliated to R.T.U., KOTA) The topic of the project is “Trends in Commodity Market” The report commence with general introduction, theoretical background, evaluation of commodity market etc. It covers the information about trends in various commodities listed in different exchanges. The study of the topic is elaborate and strictly confined to the topic. A sincere attempt has been made to highlight all the related areas to make the report explicit, comprehensive and relevant to the topic of study.
The project titled “Trends in commodity Market” has been carried out at “Unicon Investment Solution. The main objective of this project is to know the Awareness of investors such as jewelers, metal traders, farmers and general public about all the recent developments in commodity market and also to know the impact of these developments in commodity market. Unicon operates in various financial products and services like, Consultancy,Stock Broking, Commodity trading, Mutual Fund, Insurance, Property etc The evaluation of financial planning has been increased through decades, which is best seen in customer rise. Now a day’s investment of saving has assumed great importance. According to the study of the markets, it is being observed that there are a lot of opportunities with investors to get good returns on their investments after investing in the new commodities such as gold guinea, platinum, carbon credit etc.. In near future a proper financial planning is required to invest money in all type of new commodities because there is good potential in market to invest. In this project the great emphasis is given to the investor’s mind in respect to knowledge about the developments of commodity market where he can maximize his wealth. The needs and wants of the client are taken into consideration.
5 .INDEX: CHAPTER 1 INTRODUCTION AND SCOPE MEANING OF COMMODITY MEANING OF COMMODITY MARKET WHY TO INVEST IN COMMODITY MAJOR COMMODITY EXCHANGES: MCX. PERCENTAGE SHARE OFTURNOVER OF VARIOUS EXCHANGES CHAPTER 2 UNICON INVESTMENT SOLUTION ITS PRODUCT AND SERVICES COMPETITORS CHAPTER 3 OBJECTIVE RESEARCH METHODOLOGY CHAPTER 4 DATA ANALYSIS AND INTERPRETATION CHAPTER 5 FINDINGS. NMCE TRENDS IN COMMODITY MARKET GROWTH. NCDEX. CONCLUSION. RECOMMENDATION LIMITATIONS AND REFERENCES. SIZE.
more and more people are interested in investing in this new asset class. aluminium. such as wool. soybeans. at no extra risk. A commodity is something for which there is demand. 6 . a leading US-based authority on asset allocation estimates that commodities increased returns between 133 and 188 basis points. commodities usually fall into a number of categories. Well-established physical commodities have actively traded spot and derivative markets. Now. coal. rice. gold and silver. Why invest in commodities? Commodities allow a portfolio to improve overall return at the same level of risk. and precious metals such as gold and silver. Generally. Commodity trading provides an ideal asset allocation. While price fluctuations in the sector could get rather volatile depending on the category. wheat. Ibbotson Associates.Chapter-1 Introduction: Meaning of Commodity: Any physical item produced for trade. the ban on commodity trading was lifted after 40 years in India. Characteristic of commodities is that their prices are determined as a function of their market as a whole. these are basic resources and agricultural products such as iron ore. grain and other agricultural products. there is a lot of apprehension about when and how to invest. returns are relatively higher. However. crude oil. You may have your debt and equity funds in place. sugar. Outlook Money seeks to answer some of these questions and help you assess a whole new turf for making money. In 2003. as this is not a primary area of investment for most. In futures trading. but which is supplied without qualitative differentiation across a given market. ethanol. also helps you hedge against inflation and buy a piece of global demand growth. but investing in commodities could just be the one element to improve your portfolio.
If you are keen on taking a buy or sell position based on the future performance of agricultural commodities or commodities like gold. What do you need to start trading? Like equity markets. metals.' Commodity trading is nothing but trading in commodity spot and derivatives (futures). the Foreign Currency Regulation Act (FCRA) defines them as 'every kind of movable property other than actionable claims. Ideally. Investing in commodities should be undertaken as a kicker in your portfolio and not as the first destination for your money. you take a long position and when prices are headed south you opt for a short position. like in equity and other markets. if you think prices are on their way up. However. Investors must understand the demand cycles that commodities go through and should have a view on what factors may affect this. What is commodity trading? It's an age-old phenomenon. then you could do so by trading in commodity derivatives. or crude. Simply speaking.Who should invest? Any investor who wants to take advantage of price movements and wishes to diversify his portfolio can invest in commodities. silver. A photo identification. when farming began to be modernised. retail and small investors should be careful while investing in commodities as the swings are volatile and lack of knowledge may result in loss of wealth. 7 . you have to fulfil the 'know your customer' norms with a commodity broker. commodities means all types of products. However. PAN and proof of address are essential for registration. you should invest in select commodities that you can analyse rather than speculate across products you have no idea about. You could take a long position (where you buy a contract) or a short position (where you sell it). Modern markets came up in the late 18th century. Though the trade's mechanisms have changed. You will also have to sign the necessary agreements with the broker. In common parlance. the basics are still the same. Trading in commodities futures is quite similar to equity futures trading. money and securities.
Risk factors in commodity trading are similar to futures trading in equity markets. among others. petrochemicals. How big is the Indian commodity trading market as compared to other Asian markets? The commodity market in India clocks a daily average turnover of Rs 12. Variables like weather. ginned cotton. when it comes to perishable commodities such as agricultural products and high demand products such as crude oil. gur. Like any market. which protects the interests of investors in securities. The accumulative commodities derivatives trade value is estimated to have reached the equivalent of 66 per cent of the gross domestic product and the future will only see the percentage rising. oils. onions.Is there a regulator for the commodity trading market? The Forward Markets Commission is the regulatory body for the commodity market in India. potatoes.000 crore (Rs 120-150 billion). It is the equivalent of the Securities and Exchange Board of India (Sebi). says ICICI direct. What kind of products can be listed on the commodity market? All commodities produced in the agriculture. These include cereals. pulses. oilseeds. social changes. jute. 8 . What are the risk factors? Commodity trading is done in the form of futures and that throws up a huge potential for profit and loss as it involves predictions of the future and hence uncertainty and risk. A major difference is that the information availability on supply and demand cycles in commodity markets is not as robust and controlled as the equity market.com vice-president Kedar Deshpande. How to keep updated? Most commodity trading firms have a research team in place that prepares commodity charts and conducts detailed study on the trends of the commodity in question.000-15. mineral and fossil sectors have been sanctioned for futures trading. coffee. jute products. sugar. the demand-supply equation influences the prices. un-ginned cotton. What are the factors that influence the commodity prices in the market? The commodity market is driven by demand and supply factors and inventory. government policies and global factors influence the balance. and bullion. tea.
There are three national level commodity exchanges to trade in all permitted commodities.00 am to 11.Investing strategies based on this research are usually provided to clients. in order to maintain the futures prices in line with the spot market. have made available provisions of settlement of contracts by physical delivery. The contracts that are not assigned for delivery will be settled in cash. They usually provide daily market reports before the market opens and intra-day calls during trading hours. the buyer/seller has to express his intention for delivery about five to seven days before the expiry. On Saturday the trading hours are 10. Is delivery mandatory in commodity futures contract trading? It's not mandatory. However provisions vary from exchange to exchange and commodity to commodity. However there is always a provision for delivery in commodity futures trading to ensure that the future prices are in conformity with the underlying.00 pm. Do physical deliveries happen in commodity futures exchanges? The exchanges. The market lot for delivery is different for few commodities (higher than the trading lot). Which are the major commodity exchanges in India? There are 24 commodity exchanges in India. along with monthly and weekly research reports What are the trading hours? Commodity Exchanges (MCX and NCDEX) function from 10.55 pm (Agricommodities up to 5 pm only) from Monday to Friday.00 am to 2. They also make sure that the futures and spot prices coincide during the settlement so that the fair price discovery mechanism is in place. The right for delivery is normally with the seller. They are: - Multi Commodity Exchange (MCX): 9 .
NSE.000 trading terminals. Bank of India. This is an independent commodity exchange operating in India with its base in Mumbai. Key Shareholders: Financial Technologies (I) Ltd. The average daily turnover of MCX is about US$ 2. Energy. HDFC Bank Ltd.e ‘Diploma in Commodities Market’ in cooperation with Welingkar Institute of Management to train young managers deal efficiently in the commodities market. MCX now reaches out to about 500 cities in India with the help of about 10. MCX captures almost 72% of the market share and thus it occupies No1 position in India in the commodity market. The MCX was established in the year 2003 with NABARD. MCX works in joint venture with National Spot Exchange. as key share holders. 1 in silver. a purely agricultural Commodity Exchange for the standardization in agricultural markets. 3 in crude oil and gold in futures trading . MCX reaches out to 500 Indian cities with about 10000 trading terminals. National Bank for Agriculture and Rural Development (NABARD). MCX has 10 strategic alliances with leading commodity exchange across the globe. The exchange's competitor is National Commodity & Derivatives Exchange Ltd. Ferrous and Non Ferrous metals. National Stock Exchange of India Ltd. SBI Life Insurance Corporation Ltd.55 billion US Dollars. MCX ranks no. Fid Fund (Mauritius) Ltd etc. Bullion. Corporation Bank. no. Financial Technologies India Ltd. 1 commodity exchange.. MCX continues to be India's No. MCX has also set up a management course i. MCX is engaged in future trading in a number of commodities like agricultural commodities. no. MCX occupies no 1 position in the world in respect of silver. Globally. State Bank of India and it's associates. With a growing share of 72%. Spices and soft commodities.MCX: refers to Multi Commodity Exchange which facilitates trading in a variety of commodities in the country. No 2 position in Natural gas and No 3 position in crude oil and gold. MCX is the only market in India where multiple commodities are traded. (NSE).2 billion. It also works in conjunction with National Bulk Handling Corporation which helps farmers in bulk handling of agricultural commodities. Bank of Baroda. Oil and Oil Seeds. 10 . 2 in natural gas. Pulses. Plantations. MCX COMDEX is India's first and only composite commodity futures price index. The average daily turnover of MCX is about 1.
LIC. 11 . The aim of the company is to make forward contracts simple.an affiliate of Fidelity International. Canara Bank. LIST OF VARIOUS COMMODITIES TRADED ON MCX MCX Code GOLD GOLDM SILVER SILVERM Crude Oil Copper Zinc Natural Gas Aluminium Kapas Kapas khali Rubber Cofrob Potato Potatotrwr Cardamonm Nickel Mentha oil Name Gold Gold Mini Silver Silver Mini CrudeOil Copper Zinc Natural Gas Aluminium Kapas Kapas khali Rubber Coffee robusta Potato Potato Tarkeshwar Cardamom Nickel Mentha oil Price quot. promoted by national level financial institutions like ICICI Bank. . safe and secure.4. Ltd. 10 gm 10 gm 1 kg 1 kg 1 bbl 1 kg 1 kg 1 mmbtu 1kg 20 kg 50 kg 100 kg 100 kg 100 kg 100 kg 1 kg 1 kg 1 kg Lot size 1 kg 100 gm 30 kg 5 Kg 100 bbl 1 ton 5 ton 500 mmbtu 2 ton 4 ton 5 ton 1 ton 1 ton 3 ton 3 ton 100 kg 250 kg 360 kg 1 Rs. HDFC Bank and SBI Life Insurance Co. Corporation Bank. NCDEX is a public limited company incorporated on 23. NABARD. Fid Fund (Mauritius) Ltd. NSE. ICICI ventures. Bank of Baroda . Union Bank of India. Canara Bank. 100 10 30 5 100 1000 5000 500 2000 200 100 10 10 300 300 100 250 360 P/L NCDEX: NCDEX: NCDEX stands for National Commodities and Derivatives Exchange Ltd.. Bank of India.2003 under the Companies Act.
nation wide reach. NCDEX offers a platform for market participants to trade in commodities and derivatives under sound global practices and on a wider canvas. This provides for good knowledge of the prices for all the parties involved. on line commodity exchange and its speciality is that it is a technology driven exchange market. The NCDEX offers many benefits. The NCDEX is also taking initiative to train the farmers through commodity exchanges LIST OF VARIOUS COMMODITIES TRADED ON NCDEX NCDEX 12 . polymers etc. Another important feature of NCDEX is its transparency. While MCX also exists for future trading in multiple commodities. The NCDEX website gives trend analysis and the prices of the various commodities traded on a daily basis. Goldman Sachs. experience and expertise in the field of financial dealings and contracts. technology and risk management skills. Energy.CRISIL. Precious metals. The promoters of the company are financial institutions with long standing. NCDEX is located in Mumbai and has 550 centres all over the country. the Indian Companies Act. trust. NCDEX trades in 57 commodities like agricultural commodities. Base metals. NCDEX is regulated by the Forward Markets Commission and is governed by the Forward Contracts Regulation Act. The Stamp Act and the Indian Contract Act. The NCDEX is a national level. the NCDEX is an online corporate market. Ferrous metals. So they bring in experience. They hold equity shares in the NCDEX. IFFCO and PNB with an aim to bring in standardization and professionalism in forward contract and also to bring in security to the producers.
Indian commodity market which expanded by 50 times in a span of 5 years from Rs.P / L 500 100 50 200 50 100 250 30 200 100 150 10 500 10 100 1000 100 100 100 100 Makai Batata Mari Rai Khand Haldar Tuver Adad Ghau National Multi Commodity Exchange of India Ltd.36 crore in 2007. Trends in Commodity Market Market trends are described as sustained movements in market prices over a period. is now expected to grow at a steady speed of 13 . Ahmedabad (NMCE) www.66530 crore in 2002 to Rs.nmce. Gujarat Agro Industries Corporation Limited (GAIC) and Punjab National Bank (PNB).Code CASTORDSA CHARJDDEL CHLL334GTR COCUDCAKL GARGUMJDR GARSEDJDR GURCHKMZR JEERAUNJHA KAPASSRNR MAIZYRNZM POTFAQDEL PPRMLGKOC RMSEEDJPR SUGARMMZR SYBEANIDR SYOREFIDR TMCFGRNZM TURDESAKL URDDESJAL WHTSMQDELI Name Castor Seed Chana Red Chilli Cottan Oil Cake Gar Gum Gar Seed Gur Jeera Kapas Maiz Potato Black Pepper Rape Muster Seed Sugar M Grade Soyabeen Refine Soy Oil Turmeric Tur Dal Urad Dal Wheat Local Name Erandiyu Chana Marachu Price quot.3753. 20 kg 100 kg 100 kg 50 kg 100 kg 100 kg 40 kg 100 kg 20 kg 100 kg 100 kg 1000 kg 20 kg 100 kg 100 kg 10 kg 100 kg 100 kg 100 kg 100 kg Lot size 10 ton 10 ton 5 ton 10 ton 5 ton 10 ton 10 ton 3 ton 4 ton 10 ton 15 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 1 Rs.3.com It is the first de-mutualised electronic multi-commodity Exchange of Agricultural Co Operative Marketing Federation of India Limited (NAFED).
the growth in commodities trade was by 276% as it went up at Rs.000 crore in FY 2005 and well past that in FY 2006. Commodity trading in India. in 2006.about 30% by 2010 and touch a volume of Rs. the size of commodities trade stood at Rs.156. In 2003. However.from Rs 1. 14 . which was banned in the 1960s. recording an increase of 341%. Gold. a boom in construction and infrastructure activity fuelled interest in steel and other base metals in rapidly growing economies such as India and China. say the ASSOCHAM findings. Furthermore. resulting in a surge in interest in the Indian commodity market. it could register year on year growth of 27% over the last year.MCX -.7% in 2004 to 20% in 2007 and is expected to go up many folds since commodity markets would remain friendly to its subscribers. This trend is likely to continue. Interestingly.000 crore.000 crore in financial year 2004 to Rs 5.7415613 crore in next 2 years. trading volumes in the Indian commodity market have also seen a steady rise -. Sajjan Jindal said that the growth in commodities derivatives trading which was at massive level in the last five years would now grow by about 30% to reach projected level of Rs. Mr. though the commodities trade increased to Rs.74.71.340 crore.13 crore since people’s participation in such trade would continue. 2.29. soya oil.and the National Commodity and Derivatives Exchange -. resumed in 2003 through the Multi-Commodity Exchange of India -. Releasing the ASSOCHAM estimates.571759 crore in 2004.122 crore.129364 crore which thereby went to Rs. Excessive liquidity and benign interest rates have been vital for such growth in the two markets in India. the trade in commodity reached at Rs. said Mr. The former is slated to hit the Indian markets shortly with an Initial Public Offering. Jindal.12.36 crore and registered a growth of 23%.NCDEX.2. The daily average volume of trade in commodities exchanges by December 2007 was over Rs. The turnover as proportion to GDP of commodity trade increased from 4. rubber and raw jute were the most actively traded commodities on an average. For 2007. according to findings of the ASSOCHAM. guar seed and soyabean and in NMCE pepper. In 2005.739.155.753. its President.33. The current huge investments in the commodity market by dedicated and hedge funds were not there earlier. silver and crude recorded the highest turnover in MCX while in NCDEX.
manifestations of a genuine commodity-price boom. India. they can have a larger impact on the overall economic well-being of families.even entire countries -. while refining capacity and oil-rig numbers reached maximum levels in 1981. communities -.. which in real terms is equivalent to $90 a barrel.. Herein lies the cyclical nature of trends in the commodity markets. Supply response is inadequate while demand is insatiable. In 10 years time.was discovered as long as 20 years ago.that are dependent on commodity exports for cash 15 . is not producing what it once was. North Sea and US production are past their peak. port operators are expanding loading bays to keep pace with the surge in shipping traffic. Not only do they affect the price people pay for food and clothing.. The big injection of demand has come from China .which last year overtook Japan as an oil importer . to a lesser extent. . short-term shocks and price spikes in agricultural commodity markets aren't just arcane macro-economic phenomena -.Herein lays the cyclical nature of trends in the commodity markets.and. Ghawar in Saudi Arabia. The world currently produces 84 million barrels per day.one that contains more than a billion barrels of oil . The last ‘elephant’ oil field . Oil prices peaked at $40 a barrel in 1980. Meanwhile. Supply response is inadequate while demand is insatiable. Meantime.. Commodity markets: global trends.. production. There was little incentive to maintain expensive spare capacity thereafter. and the world’s biggest oil field. These are clearly physical. demand for energy has gone through the roof. local impacts Least-developed countries most vulnerable to price declines Long-term trends. But all of a sudden. The low oil prices that persisted from the mid-1980s led to a serious under-investment in the long-term infrastructure for oil exploration. shipping and refining. as opposed to just speculative.they have very real impacts on the day to day lives of people everywhere. demand could be 60 mbd higher than it is now. it seems. Oil tanker capacity peaked in the late 1970s.
in the second half of the 1990s prices of several commodities exported by developing countries fell to their lowest levels since the Great Depression. The State of Agricultural Commodity Markets (SOCO). Raw materials.621. The real price decline for horticultural products. According to a new FAO report.731 NBOT(Indore) 58.735 14.997 3. tropical beverages.683 57.385 101. the impact of commodity price fluctuations is greatest in the poorest countries of the developing world.463 53.122 2. Overall.479 24.823 54.066 NMCE(Ahmadabad) 13.803 NCDEX 266.505.earnings. according to the report." SOCO points out.759 2.5 billion people in the developing world depend on agriculture for their livelihoods.988 18. Turnover of Indian Commodity Exchanges : Indian Commodity Futures Market (Rs Crores) Exchanges 2004 2005 2006 Multi Commodity Exchange (MCX) 165147 961. meat and dairy goods has not been so dramatic.066.591 All Exchanges 571.340 2007 2.155. real prices for all agricultural commodities have declined over the past 40 years.739. SOCO observes. "An estimated 2. And.338 1.582 37. oil crops and cereals have experienced the steepest declines.633 1.072 74.149 Others 67.336 16 . but the rate of decline has varied from commodity to commodity.206 733.375.686 944.
Turnover of commodity futures by various countries 17 .
Trends in various Commodities:: The week that went by was eventful on many counts for the Indian commodities sector. The US currency recovered after some initial weakness on positive economic data. The gain was shortlived as fund selling and recovery of 18 .825 per 10 gm respectively.8%. Globally. Fuel consumption in South Korea decreased for the eighth straight month in June leading to downward pressure on crude prices in the short-term and the trend might continue in the week ahead. dragging oil down from record peaks over $147 a barrel on July 11.23 or 1.60 an ounce on the Comex division of the New York Mercantile Exchange. In Asia.760 and Rs 12. Anxiety over the lower rainfall so far is impacting the markets of agricommodities whose spot and future prices are reflecting this concern for several key commodities including sugar.8% to settle at $123. Crude oil prices weakened as recovery in dollar pressured the prices. Japan’s crude oil imports fell for the first time in past nine months. Crude Oil: Crude futures declined to seven weeks low on increasing worries that economic slowdown will lead to lower demand for oil. standard and pure gold recorded a smart gain of Rs 130 each to Rs 12. high crude oil prices are cutting fuel consumption.9 million barrel per day in July against that produced in June.26 a barrel. investors flocked into commodities earlier this year as a hedge against inflation and the weak dollar. Reports that the yellow metal registered a positive trend in London market for the first time in three days in expectations of a slide in dollar value has triggered fresh bout of speculative buying in local markets. but analysts say they have begun to unwind those positions over the past two weeks. Gold: After losing more than Rs 700 in the mid-week. Gold for August delivery rose $1. Crude oil futures suffered a weekly loss of 4. In Mumbai. Oil industry consultancy Petro Logistics Ltd’s preliminary estimates stated OPEC will increase production by 32. gold limped back to green zone during the weekend in the domestic markets as investors returned to market and a firm note from international markets. The fall of crude oil is indeed a relief for a country facing inflationary pressure since the beginning of the year. Recovery in dollar after some initial weakness also pressured the oil prices.80 to $924. Fuel consumption in the United States and other industrialized nations has begun to slide. The most active September delivery crude oil futures on NYMEX shed $2. Gold prices remained steady despite the lower demand from jewellery sector. the major hub of gold in India.
Although FMC chief denied all the possibilities of ban in farm futures. we foresee a lot of volatility in base metals and currency movement will play a crucial role in determining prices. With the strengthening of the US Dollar. Appreciation in INR is also one of the major factors for the drastic fall in the last week. Uncertainty over the farm futures along with positive rain forecast by the Met department added to the bearish sentiment. 1 per dollar in the last 5-6 days.900. which might also support the fall in the coming week.150-200/qtl in the spot as well as futures market. Also. base metals looked unattractive for holders of other currencies. Weak oil and strong dollar are negative factors for gold prices.000 levels. Indian market remained quite immune to these trends.dollar. then too prices tumbled down across the Guar growing regions on better crop prospects. 19 . The overall trend in Guar in the short as well as medium term would depend on the rainfall. In the coming week. Chinese physical buying is expected to pick up when copper prices come below the psychological $8. we had expected copper prices to come below $8. Copper prices are facing pressure on the downside due to a slowdown in physical buying from China as prices were quoting at $8. Major concerns over slowdown in demand from the US affected base metal prices. Guar: Guar prices remained under pressure and registered a sharp fall of Rs. Lead prices have been gaining on the back of news that Chinese production of lead had declined due to maintenance work. Though there are a few fundamental reasons for copper to bounce back.000 mark. Base Metals:: Last week’s trade in base metals was volatile on the back of currency movements and impact of US macroeconomic data. This may once again keep the exporters sidelined as it would eat their margins.750-$7. Gold is likely to test $900 mark if oil continues to languish.750-$7.900 with major resistance at $8. we foresee a cooling in prices in the coming week and expect copper to trade between $7.000 levels and trade between $7. Another factor that pushed prices higher was that LME inventories for lead have declined 10% this month from a two-year high at the end of June. fresh slide in oil prices pushed gold down to $921 levels for delivery. In the last week.000. Reports also suggested that China’s first-half refined lead exports were 80% lower than a year earlier. Further downward correction in gold prices as a result of lower crude price can be expected as both of them move in tandem. we have to keep a close watch on INR movement as it will impact the exports from India. Rupee appreciated by Re.
Jeera futures have recovered marginally on profit booking at NCDEX. Next week sugar is likely to see a firm trend with downward movement towards weekend.2 MMt compared to about 1.000 a quintal is on the cards. Demand from the overseas have reduced marginally but is expected in the coming days. Supportive export data for the first 25 days of July also could not lend much support to the market. exports are likely to increase to 4. good physical demand for the coming festival and marriage season is expected to provide support in the coming months. Expect sugar exports to be highly restricted or even banned. prices are likely to be steady to better during festivals and later in the coming sugar season. Indian Jeera at the international market is quoting at around $3000/tonne and Syria at around $3400-$3600/tonne. Resistance can be seen at 13640 and 12930. Palm oil demand weakens during rainy season as it solidifies at low temperatures.7 MMt in the previous year. India has already shipped 3. In addition. Crud:e Palm Oil Palm oil traded mixed following the weakness in CPO futures at BMD and domestic exchange. Reports of a likely ban on Agri Futures led a fall in all commodities. Prices first reaching and then breaching Rs 2. 20 . prices remained subdued on dull demand amidst rumours that the government may provide extra quota of 2-3 MMt. Deficient rains in Southern India and West India could lead to upward movement of sugar prices. Generally demand remains poor during end of the month and regains by start of the month.7 MMt so far. Meanwhile. Sugar: Steady trend was visible in sugar spot prices on improved buying support in the domestic market while supplies were lower. Bullish exports are not sufficient to offset the piling stock levels in Malaysia. towards the week end. However. Sugar production in the coming crop year that begins in October that is expected to sharply decline to 20 MMt.32 million hectares till July 18. Despite ample stocks and sluggish demand presently. Besides. Acreage has fallen more than 18% to 4.6-3. Stocks at the domestic as well as global level are standing at lower levels. NCDEX Jeera September contract may find an initial support at 13190 and thereafter at 12870. industry sources said. Demand is sluggish around current levels as further decline in prices is expected in near -term. there are reports that China is offering its stocks at lower levels of $2800/tonnes.But in Maharashtra.Jeera: Jeera prices in the spot market were quoted at firm rates in the beginning of the week but declined on Thursday tracking futures. Crude palm oil futures on BMD closed lower negating the recovery in soy oil at CBOT and crude oil futures. Thus in long term the trend is still bullish.
8 21 . the competition between the two has been at the low-end of the spice market. Technical analysis shows CPO prices to remain weak and likely to record further lows.100/qtl down at Rs. Despite a recent fall in prices concern over supplies of the commodity led to upward movement of prices. Indian exporters see no chance of narrowing down this $200 per tonne price differential in the near future due to supply constraints. Internationally. This has always given it the advantage of outbidding others in this mart.Natural rubber futures in Tokyo rose the most in 10 days as some investors deemed yesterday’s fall to a seven-week low was overdone on signs supplies of the commodity remain tight. and if lower carry-in of rapeseed/mustard is also considered. Outlook remains bearish in near –term following expectation of rains in certain oilseeds growing regions during next one week and weak global cues. Around 12 tonnes were sold for the arrivals of 18 tonnes. In case of India. The prevailing price level is likely to attract fresh buying interest amongst the domestic grinders during the days ahead. Rubber Natural Rubber in Tokyo rose to a ten-day high while in Kerala markets it rose to an all time high during the previous week even as crude oil prices fell.14300/qtl in comparison with prior trading session. the country’s additional vegetable oil import requirement would expand by nearly 10-12 lakh tonnes from the current level of around 6 million tonnes. This concern was evident in the gain in the expiry price at Tocom which expired at 0. for the ensuing oil year 2008-09. Already there is a price differential of $200 per tonnne that is weaking the demand for Indian pepper. Vietnam offered $100/tonne down and VASTA was quoted at $3200/tonne fob while 500 gl at $2800/tonne. In the domestic spot markets the sentiments were weak despite the underlying buying interest witnessed at the terminal markets especially from the buyers at the primary market.000 tonne. India’s entire pepper production this year is estimated at 50. half Vietnam’s production.Bearish trend is expected in the near term although medium term-outlook is attractive. lower oilseeds output is likely to reduce the availability of edible oils. Firstly.Domestically. Indian parity was offered at $100/tonne down at $3400/tonne fob. The garbled berries were quoted Rs. Pepper futures staged a recovery in the weekend after losses during the mid-week. Black Pepper: India’s black pepper is facing tremendous competition from arch rival Vietnamese pepper. The traders are seen averaging out at the prevailing levels.Vietnam being the largest producer of black pepper in the world has always been a volume player in the global market.
7 million ha. As per the data released by the Government. EU-27. it might not be sufficient for Nafed to procure mustard this year. surpassing the previous high of Rs 136 quoted in May this year.7 mt.31 mt this month with increases for Canada. Maize Global maize/corn production for 2007-08 is projected higher by 1.1 mt at 769.” the Kotak report said. but the slowdown in the global market affected the sentiments of the domestic market. but only modestly undervalued. Currently the prices are ruling above Rs 2. and FSU (former Soviet Union)-12. Oilseeds & edible oils Possibility of a lower rabi oilseed crop for 2008 in India could aid bullish sentiments. Traders say that rubber is being stocked on anticipation that prices may touch Rs 150 a kg. the demand for corn is only going to increase.4 per cent. India has already imported around 38 per cent more oil in November 2007 compared with last year.percent higher than the previous day. The decline in mustard seed production and lower carryover stocks could lead to lower availability of domestic oil. We continue to view corn as positive. which explains the current short supply.800 per quintal. The Indian edible oil imports could touch more than 5 mt this season against 4. rubber prices touched an all-time high of Rs 137 for benchmark grade RSS-4 . This could encourage import rather than export of rubber from India. “Although the Government has set the minimum support price for rapeseed at Rs 1. despite a higher soyabean crush activity is a cause for concern.” the Kotak report. Although production is in full swing in most of the rubber plantations of the state. down 11 per cent from a year ago. alternative fuels will attract more interest in the days to come. the prices were bound to cross Rs 140.750 tonnes while consumption registered a growth of 6. During mid-week. According to leading dealers in Kerala. 22 . oilseed acreage as on December 14 for the rabi season 2007-08 stood at 7. “As crude oil prices march closer to the $100 a barrel mark.300 per quintal.77. supply to terminal markets such as Kochi and Kottayam is limited even with the high prices.8 per cent in Q1 at 1. Rubber could go beyond Rs 140 but for the weaker trends in Tocom and Bangkok. The dependence on imports is expected to increase for the next year. Production was up by 23. As corn is used to process bio-diesel.
Cardamom Incessant rains in Kerala have delayed the harvest of cardamom. Turmeric Acreage under turmeric is expected to be down by 10-15 per cent compared with last year due to lower price realisation for farmers in the current season.” Kotak said. 23 . ICE Futures has seen volumes almost double in the last year alone and volumes on LME have increased tenfold since 1990. There was a similarly wide range of estimates regarding the breakdown of investment by market sector. our price outlook remains positive for 2007-08.000 tonnes compared with 11. Growth in commodity markets: Investment in commodity markets has undoubtedly grown. “Production this year is expected around 4-4.235 tonne last year. There has been rapid growth in the number of contracts traded on both LIFFE (soft commodities) and ICE Futures (energy).14 However in some markets OTC business is equal to several multiples of these volumes.2 million bags compared with 5. Prices are expected to trade firm in the short term. crops are infected by fungus due to rains. Figure 6 shows that this market too has increased greatly in recent years. On-exchange volumes have certainly increased greatly in the past five to ten years.” Kotak said. “With Indian cardamom demand-supply situation being tight. In addition. Even the larger market participants that we spoke to were unable to accurately gauge the total size of the market.2 million bags of last year. The December 2006 Bank for International Settlements (BIS) Quarterly Review includes data on the amount of outstanding OTC commodity derivatives contracts among those who report. and estimates varied widely. But the lower acreage would be set off by the high carryover stock of around 1-1. The cardamom production is expected to be 25 per cent lower at 9.2 million bags. but commentators found it difficult to quantify.
broking community. guar seed and soyabean and in NMCE pepper. it noted. imposing capital adequacy norms and defining qualification criteria. “Gold.” the study said. 24 . according to a study by the Associated Chambers of Commerce and Industry of India (Assocham). scores of commodities in which futures trading is permitted are still protected under the Essential Commodity Act. without monopolistic government control. rubber and raw jute were the most actively traded commodities on an average. “The growth in commodities derivatives trading would now grow by about 30 percent to reach a projected level of Rs. “The daily average volume of trade in commodities exchanges by December 2007 was over Rs. 1955. It also noted that Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. Assocham found that the Indian commodity market expanded 50 times in a span of five years from Rs.665. controlled market. However.156 billion in the next two years. trading system. the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers.156 billion ($1.120 billion. To attract active traders to commodity futures. The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. it is imperative that commodity pricing be left to market forces.7 percent in 2004 to 20 percent in 2007 and is expected to go up many-fold since commodity markets would remain friendly to subscribers. “Some of the major problems associated with commodity markets in India include infrastructure.753 billion in 2007 as people’s participation in such trade continued to grow.33.73 trillion by 2010: New Delhi.73 trillion) in volume by 2010.74.” said Jindal. The turnover in proportion to GDP of commodity trade increased from 4.3 billion in 2002 to Rs.” said Assocham president Sajjan Jindal.74. This trend is likely to continue. For a vibrant futures market. in India. June 15 (IANS) The Indian commodity market is expected to grow by 30 percent and will reach Rs. soya oil.” he added.Commodity market to reach $1. integration of regional and national exchanges and integration of spot and futures markets. silver and crude recorded the highest turnover in Multi Commodity Exchange (MCX) while in National Commodity & Derivatives Exchange Ltd (NCDEX).
and Commodities on NCDEX and MCX through our Commodity broking arm Unicon Commodities Pvt. Mission : To create long term value by empowering individual investors through superior financial services supported by culture based on highest level of teamwork. 25 . We give personalized premium service with reasonable commissions on the NSE.Chapter -2 Description of the Organization . efficiency and integrity.its products and its competitors. Vision : To provide the most useful and ethical Investment Solutions . Our distribution network is backed by in-house back office support to serve our customers promptly. We give personalized services on Insurance (Life & General) & Investments (Mutual Funds & IPO's) needs. Unicon has been founded with the aim of providing world class investing experience to hitherto underserved investor community. With our sophisticated technology you can trade through your computer and if you want human touch you can also deal through our Relationship Managers out of our more than 100 branches spread across the nation. Our tailor-made customized solutions are perfect match to different financial objectives.guided by values driven approach to growth. Ltd. BSE & Derivative market through our Equity broking arm Unicon Securities Pvt Ltd. The technology today has made it possible to reach out to the last person in the financial market and give him the same level of service which was available to only the selected few. client service and employee development. through our Insurance & Investment distribution arm Unicon Insurance Advisors Pvt. Ltd.
Mutual Funds and IPO’s also. Unicon is a customer focused financial services organization providing a range of investment solutions to our customers. General Insurance. Our key product offerings are as follows: COMMODITY EQUITY DEPOSITORY PRIVILEGED CLIENT GROUP DISTRIBUTION PROPERTIES NRI SERVICES BACK OFFICE 26 . they have the advantage of having all Advisory Services for Life Insurance. We work with clients to meet their overall investment objectives and achieve their financial goals. as we understand the need of transactions to be executed with high speed and reduced time. Our clients have the opportunity to get personalized services depending on their investment profiles. At the same time. Our personalized approach enables clients to achieve their Total Investment Objectives.Products and Services: Unicon customers have the advantage of trading in all the market segments together in the same window.
Online Commodity Internet trading Platform through UniFlex.e. Key board driven short cuts for punching orders quickly. 1. 12. 7. 3. Stop-loss feature. 4. Greater exposure for trading on the margin available Common window for market watch and order execution. 11. 2. Tick by tick live updation of Intraday chart. Market depth.Unicon offers both Offline & Online trading platforms. Real time updation of exposure and portfolio. Facility to cancel all pending orders with a single click. Best 5 bids and offers. 5. i. updated live for all scripts. 8. 10. Add any number of scrips in the Market Watch. Facility to customize any number of portfolios & watchlists. MCX) in one screen. Live Market Watch for commodity market (NCDEX. 9.COMMODITY: Unicon offers a unique feature of a single screen trading platform in MCX and NCDEX. 27 . Instant trade confirmations. 6.
Unicon Swift Application based terminal for active traders. convenient way to hold securities as compared to holding securities in paper form. will offer depository accounts for individual investors as well as corporates which will enable them to transact in the dematerialized segment. * Re-materialization: You can also request for Re-materialization which enables you to convert the dematerialized shares into physical form. 28 . This facility is available to all our online customers the moment they get registered with us. Depository offer a safe. It provides better speed. Unicon offers both Offline & Online trading platforms.EQUITY To know Unicon offers a unique feature of a single Screen Trading Platform of NSE . without any hassles. BSE & Derivatives. through its Depository operations. The company believes in efficient and costeffective and integrated service support to its brokerage business. Our service provides an integrated single platform for all our clients ensuring a risk free. Online Trading Products : Unicon Plus: Browser based trading terminal that can be accessed by a unique ID and password. Unicon Securities Private Limited. greater analytical features & priority access to Relationship Managers Unicon Depository Services It offers dematerialization services as a participant in Central Depository Services Limited (CDSL). efficient and prompt depository process Facilities Offered by Unicon * De-materialization: You can submit your physical shares at the Unicon branch for dematerialization into electronic form. as a depository participant.
PCG has a specialized advisory team which nurtures all your investment. PRIVILEGED CLIENT GROUP: We provide customer focused transparent investment planning and solutions. Keeping track of the premiums etc to its customers.* Transfer: Inter and intra depository services are available through which you can transfer shares. We offer services which benefit your special status. Unicon has over 100 branches and a huge number of “Business Development Executives” who help to source and service the customers throughout the country. * Easi: You can view your demat account over the Internet and avail a host of services. DD’s. download. * Corporate Actions: While holding your stock in demat account. * IPO: You can apply for IPO using your demat account details and on allotment the securities are transferred directly to your demat account. This facility empowers our clients to view. in case you are eligible for any bonus and rights issues the allotment would be transferred to your demat account. print updated holdings with respective valuations. We ensure that your investments work for you rather than you for them DISTRIBUTION Unicon is fast emerging as a leader in the Insurance and Mutual Funds distribution space. Unicon is fast becoming the preferred “Vendor Independent” distribution houses because of providing efficient service like free pick-up of collection of cheques. Unicon offers the following distribution products: IPO's Mutual Funds Insurance 29 .
MUTUAL FUNDS: Unicon Provides expert advice to its clients for their investments in equity & debt markets through Mutual Funds. prospectus. Online IPO facility is open to all our registered clients at no cost whatsoever.IPO: At Unicon you can invest in the Primary markets (Initial Public Offerings) online without going through the hassles of filling up any IPO application forms or any other paperwork. Our experts advice you the best investment solutions that suit you and help you to reach your financial goals. We help you ascertain your risk profile & guide you with the right product mix which reduce your tax liability increase your savings & enhance your wealth. medium or aggressive investment risk appetite. Weather you have a conservative. HDFC. AXIS bank. You must have signed a Power of Attorney (POA) agreement for applying in IPO’s online. 30 . All you need is the following to subscribe online to the IPO issues: A trading account with Unicon A Demat account with Unicon An access to the net banking facility with the Banks through which Unicon has operational Gateway facility (ICICI. our experts would guide you to build a portfolio to optimize the return of interest. transfer of funds online through secured payment Gateways of leading banks like ICICI. analysis on the recent IPO listings. offer documents and other IPO research reports so as to help you take an informed decision to invest in the IPO issues. IPO Calendar. In addition to the above we shall provide you with the In-Depth analysis of the IPO issues which shall be hitting the Indian Markets in near future. We shall make sure that you do not miss the opportunity to subscribe/invest in a good IPO issue by providing you an online IPO application form. HDFC and AXIS Bank).
to provide you prompt & efficient service. equipped with top quality infrastructure facilities. Unicon team evaluates the client's business environment and studies the risk profile. there is a solution also. based on the results of these evaluations. or you can call our Relationship Manager to guide on your Investments. Following is the glimpse of Life Insurance Plans: Protection Plans Investment Plans Child Plans Retirement/Pension Plans Saving Plans NRI Plans Health Plans 31 . Our philosophy is that for every financial problem. Unicon has a nationwide network of branches all over India. And we are here to give you complete financial solutions. Unicon comprises of a team of distinguished professionals from insurance. integrated insurance package that is perfectly suited to the client's risk profile. We offer a very wide range of products to fulfill your particular requirements. At the same time we offer you very Prompt & Reliable Policy related service for enduring relationship. finance and other management disciplines who have vast business & managerial experience. Life Insurance : Unicon offers you a Peace of Mind by offering various life insurance plans for your unique & specific needs. Unicon team then suggests the most cost effective .INSURANCE: General Insurance: Unicon offers all products of General Insurance under one umbrella. You can always have an access to our 83 Branch Offices situated at prime locations of the city.
All purchase and sale transactions have to be reported to the RBI by the designated bank. all deliveries must only be routed through beneficiary accounts and not directly through the broker. marketing strategy. The aggregate paid up value of equity of any company purchased by all NRI's and OCBs cannot exceed 10 percent of the paid up capital of the company and in the case of convertible debentures. Whether it is a residential or commercial development. within 24 hours of the transaction.PROPERTY: Unicon is a specialized property broking company. present retail. Original brokers contract notes have to be submitted to the designated Bank branch. interaction with the professional teams and sales or leasing of the property. Unicon offers a total solution to our clients inclusive of market research. He is allowed to invest only 5% of the paid up capital of a company. Unicon’s professional team of consultants will assist you to identify suitable premises that satisfy your requirements. Shares bought by him cannot be sold unless the payout of the same is received from exchange. “Whether you are looking for a home or a place to conduct business Unicon shall find you one” NRI SERVICES: India becoming the epicentre of growth the Global Indian feels the need to be connected to the domestic growth story. Our highly experienced and professional teams. We will help you negotiate favorable leases and assist with the preparation of all documentation. office. Procedure for NRI operations in Indian Capital Markets:The NRI can deal with only one bank at any point of time. 32 . industrial and residential property opportunities to a broad base of clients. He can enter only into delivery based trades. Unicon now offers a convenient and hassle-free way of Investing in the Indian Securities Market to the people who are living outside India and wish to participate in the Indian Growth story. the aggregate paid up value of each series of debentures purchased by all NRI's and OCBs cannot exceed 10 % of the paid up value of each series of convertible debentures.
All Purchase and Sales will be dealt separately for payments / receipts. BACK OFFICE: Unicon through its online back-office aims to increase the transparency and provides you the link to view the details of your account online anytime and anywhere. No adjustments of purchase against sale consideration should be done.He will be required to make bill to bill payments/ settlements. The transaction will have to be reversed in the account and losses if any will be borne by the client. Shares cannot be bought against the shares sold in the same settlement. Sale proceeds of any transaction not reported/approved by the RBI is allowed to be credited to the NRE/NRO savings/demat account. All tax liabilities arising out of buying and selling of securities will be handled by the designated bank. Here are the advantages of viewing the following reports online: Sauda Details Financial Ledger Net position for the day Net position Detail (for the complete financial year) E-Contract Note 33 .
Even so. Our name is backed by high caliber human resource and state-of-the-art infrastructure. Indian economy is riding high enjoying 8% growth rate. his ignorance of the market puts him in a disadvantageous position. We are also enjoying favourable foreign exchange balances. Similarly even if a farmer waits for a future’s contract to get a reasonable price. and the industrial and agricultural sectors are doing well. Though there is a spot market for many commodities to secure immediate price.000 individual/ corporate/ HNI & NRI clients. we are committed and dedicated to give our best services to them. One among them is the middlemen and mediators trying to hoodwink the producer about the reasonable price and the producer’s inability to wait for the right price for lack of infrastructural facilities. We are member Brokers for BSE/ NSE/ NCDEX/ MCX. Appreciating the increasing needs and demands of our clients and the market. 34 . We are determined to provide the entire basket of investment solutions to our clients. MCX and NCDEX were formed in answer to these problems faced by the producers and farmers. We have a strong team of over 250 Business Partners who are assisting us to tap the retail & corporate clientele throughout the country. the producer or the farmer does not get his due for a host of reasons. all of which combine together to make what UNICON is today… We have a nationwide network with over 105 branches. Presently we have 45.ASSOCIATES Unicon Investment Solutions is one of the most revered financial services company in the market place. it always results in the producer settling for a loss.
COMPETITORS: As such there are large numbers of firms providing the above stated services but among them some of firm ones are as follows: RELIGARE INDIA INFOLINE SIDDHI VINAYAK BONANNZA ANAND RATHI ANAGRAM SPAN COMMODITIES ANGEL BROKING KOTAK SECURITIES 35 .
For e. The purpose of research design is to decide approach that answers our problem in best way. Research Design Research Design is the overall plan to conduct research.Chapter-3 Objectives and Research Methodology Objectives of the study: To understand 1) 2) 3) 4) 5) What is commodity market? Indian scenario of commodity market. smaller sample size.g. given constraints on resources. It covers: • • • data collection methods sampling decisions data analysis methods Often constraints on resources limit research design so that it is less ideal. Various trends in commodity market. 36 . Commodities market from personal client perspective. RESEARCH METHODOLOGY: For conducting study following analysis was done. Global scenario of commodity market.
Here cluster includes jewellers. retailers. speculators. traders etc. Descriptive research design – longitudinal and cross-sectional Used for describing characteristics of population 3. 37 . individuals. Descriptive Research Following designs (methods) are used for descriptive research: o Secondary data o Focus groups o Depth interviews o Surveys The tool used for research required in conducting the study is Depth interview. Exploratory research design Used for discovering ideas and insights 2.Types of Research Design There are three types of research designs: 1. Sample Design: Cluster sampling is used for conducting research. Causal research design Used for proving cause-effect relationship The research design used for this study is Descriptive Research.
Advantages of secondary data • • • • • • Quickly available Economical Dependable Easy to Use Accessible Understandable While conducting study the secondary data was collected as follows: • Analyse the following data from Management Information Systems (MIS):a. Contact no. • Other sources: Information through various web sites. b. It is already available to the researcher before he starts conducting his research work. Electronic Media.Instruments of data collection: Secondary Data Secondary data is the data gathered by someone else prior to the current needs of the researcher. Address c. 38 . Magazines and Journals. Data relating competitors. Newsletters and weeklies.
Depth Interview Principle of Depth Interview • • Respondent will reveal truth about sensitive issue after taking him in confidence. traders in metal. General public. farmers and general public The researcher originates the primary data. The primary data for the study was collected as follows: • Feedback from a. Characteristics of Depth Interview • • • • An unstructured interview of the respondent is taken Only one respondent is interviewed at a time Usually conducted by experienced researcher Interviewer’s role is extremely important since the emphasis is on probing For conducting the study the respondents selected were jewellers. 2. Existing client. Metal traders c. Respondent’s answer will be obtained by probing. e. Primary Data Collection: 1. Jewellers b. Farmers d. Telephonic call 39 .
CHAPTER-4 DATA ANALYSIS AND INTERPRETATION: Turnover of Indian Commodity Exchanges (RS in Crores) 3000000 2500000 2000000 1500000 1000000 500000 0 2004 2005 2006 2007 M CX N CDEX N M CE OTHERS 40 .
21. penalties and margins.34% MCX. exporters/importers and the end-users of a commodity. The institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the FMC in order to take necessary 41 . major challenges and policy options of commodities futures. Commodity exchanges play a pivotal role in ensuring stronger growth.Percentage share of the turnover of Indian Commodity Exchange NMCE. The delivery and settlement procedure differs for each commodity in terms of quality implications. Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. trading procedures. infrastructure capabilities. This role is defined by their functions. 74. the study points out that Commodity futures markets are the strength of an agricultural surplus country like India. and are defined comprehensively by the exchanges. processors. options. On constraints. Members of an exchange can perform and clear transactions in only those contracts which are exchange specified and approved by the Forward Market Commission (FMC). It provides an effective platform for price-risk management for all segments of players ranging from producers.73% Others.71% NCDEX. place of delivery. 0.22% The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. transparency and efficiency of the commodity futures markets. settlement and risk management practices. 3. This reflects upon the views and expectations of a wide section of investors related to that commodity. However. traders.
Broking Community: Though a large number of members exist in the exchanges’ records. However. including warehousing facilities. 1955. it is important to absorb a large number of broking firms that have diversified into stock broking and other related businesses. they are deficient in terms of the necessary institutional infrastructure. regional exchanges must introduce the electronic trading system to assure the investors of transparency and fairly priced commodities. etc. Though some exchanges occupy large premises. integration of regional and national exchanges as also integration of spot and futures markets. imposing capital adequacy norms. Controlled Market: Price variability is an essential pre-condition for futures markets. Infrastructure: The lack of efficient and sophisticated infrastructural facilities is the major growth inhibitor of the Indian commodity futures markets. without monopolistic government control. For a vibrant futures market. transparent trading platforms.measures to pave the way for a significant expansion and further development of the commodity futures markets. it is imperative that commodity pricing must be left to market forces. broking community. trading system. 42 . independent and automated clearing houses. in India. most of them are not involved in trading due to the fact that the business is not highly profitable in comparison to equities. Any deviation in the market mechanism or where the free play of supply and demand forces for commodities does not determine commodity prices will dilute the variability of prices and potential risk. Trading System: Though the operations of national exchanges are carried out through the electronic trading system. In order to attract a greater number of investors towards sector-specific commodities. etc. scores of commodities in which futures trading is permitted are still protected under the ECA. defining qualification criteria. To attract active traders to commodity futures. Therefore. Some of the major problems associated with commodity markets in India include infrastructure. a majority of the regional exchanges continue to trade via the open outcry system. the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers. controlled market.
” All the findings were communicated to Business Head for which necessary steps were taken. The actual growth cannot be ascertained as a large amount of trading is done through “dabba trading. Conclusion.by 2010. Recommendations & Limitations Findings: Commodity Market has expanded a lot in last decade. It is now expected to grow at steedy speed of 30%. MCX has the highest turnover in comparison to other commodity exchanges. 43 .Chapter-5 Findings.
The economic data in US and UK are updated very fast whereas in India we don’t get updated data when it is required. Commodities are also less risky than stocks as the commodity prices can never become zero they will have some value at ant point of time. and inflation is increasing all over the world that is why it is advisable to invest in commodities. Commodities Exchanges in India is not efficient as compared to global exchanges they are very specialized for eg: LME trades only in metals NYMEX trades only in energy futures. So this is the right time to invest in the commodities market. Commodities also provide better hedge against inflation as they have positive correlation. Commodities market if compared to stock market will give better return in long run. 44 .Conclusion Commodities market will be the market of future as this market is under a bull way because all over the world commodity resources are scarce and demand is increasing so the commodity prices will go only in one direction that is up. So this a market untapped market having great potential. People are not aware of this market in India and those who are aware has a myth that it is a highly risky to invest in commodities.
2) Personal advisory department of Unicon should also help in creating awareness about commodities market and try to educate people about this market 3) Launch some brochure having all required information about commodity market .Recommendations to Company: 1) Unicon should launch a campaign for the awareness of investors . 5) Provide details of commodity requirement. 45 . and demand. 4) Provide updated data and information to the clients. supply.
some of the people gave little time and shows lack interest for filling the questionnaire. 5) False data. 6) Appointments.people provide false data as they were scared about providing actual data such as net income . which effects on the accuracy/ reliability of the research. 3) Limited time span.some of the people misunderstood the researcher as an insurance agent so they refuse to respond on the background of already getting insured.some of the respondent gave the appointments beyond the research period therefore such people are excluded.Limitations:1) Small size of sample.because of time consideration the sample size taken small. premium paid etc.getting appointments with people was difficult as most of the people were busy and it was difficult to contact them again and again 46 . 2) People’s perception. 4) Lack interest in response.
com.Daily Reckoning.Sicom.co.com 1) 2) 3) 4) 5) 6) 7) 8) 9) 17) WWW.uk www.com www.com 10) www.lme.mcxindia.or.cn 15) www.Cme.ncdex.uk 47 .Lbma.nymex.com 14) www.ORG 18) www.Agriwatch.brusaderivative.SG 12) www.com 13) www.Crbtrader.FAO.com Hot commodities CRB yearbook www.BIBLIOGRAPHY www.com 11) www.Cbot.Tocom.com www.dce.com www.com www.co.jp 16) www.Karvycomtrade.com.