Awareness of commodity market with reference Derivative investors
A PROJECT REPORT ON
“Awareness of commodity market with reference Derivative investors”
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 1
Awareness of commodity market with reference Derivative investors
CONTENTS
SL.NO PARTI!LARS
1. Executive Summary
2. Research Methodology
3. Company profile
4. ntroduction to the topic
!. "nalysis and interpretation
#. $indings
%. Suggestions
&. Conclusion
'. (i)liography
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Awareness of commodity market with reference Derivative investors
"#"!TI$" S!%%AR&
" pro*ect report containing the +“Awareness of commodity market with
reference to Derivative investors ” a case study of (elgaum city "t ,"R-. $inapolis
(elgaum for fulfillment of re/uirement of M(" -th semester in nstitute of
Management Education and research. t 0as an opportunity to learn the practical aspects
of the firm
O'(ectives of the st)dy
1. 1o 2no0 the perception of derivative investors to0ards commodity future mar2et
2. 1o find the a0areness level of commodity mar2et in (elgaum city
3. 1o understand the commodity mar2et and its 0or2ing mechanism.
4. 1o 2no0 0hich commodity they prefer to invest.
!. 1o find the potential customer for commodity mar2et
1he pro*ect 0as underta2en at ,"R-. $inapolis (elgaum the first part of the study
is done )y collected information through net3 *ournals3 text)oo2s. "nd second part of the
study is conducted through survey of the derivative investors.
Sco*e of the st)dy
1his study is limited to only (elgaum City the study is carried out to 2no0 the
a0areness level of derivative investors to0ards Commodity $utures mar2et. 1his study
also helps to 2no0 a)out trading mechanism of Commodity Mar2et 4 the future trading
level.
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Awareness of commodity market with reference Derivative investors
R"S"AR+ %"T+ODOLO,&
Tit-e of the Pro(ect
“Awareness of commodity market with reference to Derivative investors”
Sam*-e Si.e
1he sample si5e is consist of traders in derivative mar2et of (elgaum city.166
random sample 0as ta2en to identify the a0areness level of the derivative investors
to0ards Commodity $uture Mar2et
Sam*-e Ty*e / Simple random sampling 0as adopted to select respondents.
Sam*-e Area / (elgaum city
D)ration of Pro(ect/
st 7hase 8 9ecem)er
nd 7hase 8 :anuary to "pril ;0ee2ly t0o days<
TOOLS !S"D 0OR ANAL&SIS/
1. =raphical Representation of "nalysis through S7SS. >
a. 7ie charts
DATA OLL"TION APPROA+/
7rimary data has )een used to carry out the research successfully. 1he secondary
data has )een collected from ?9E@ and MC@. $or the purpose of gathering primary data
a structure and /uestionnaire 0as designed to collect data from the derivative investors.
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Awareness of commodity market with reference Derivative investors
%ethod of omm)nication>
n order to minimi5e the )ias in data collection3 the method of personal intervie0 0as
adopted.
T+" SO!R"S O0 T+" DATA OLL"TION AR" AS 0OLLO1S
1he study relies to a great extent on primary data and to some extent on secondary data>
Primary Data/
• Auestionnaire
• B)servation and intervie0 techni/ue
Secondary Data/
• nformation is collected through internet
• $rom various text )oo2s
urnals and maga5ines
LI%ITATION O0 T+" ST!D&/
? Since the study is )ased on the convenient sampling it may not depict the accurate
outcome
? Cevel of accuracy of results of research is restricted to the accuracy level 0ith
0hich the customers have given ans0ers and the accuracy level of the ans0er
cannot )e predicted
? 1he findings are )ased solely on the information provided )y the respondents and
there is a possi)ility of )iased results
? 1he study of pro*ect is limited to only (elgaum
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Awareness of commodity market with reference Derivative investors
0INDIN,S
• More than !6D of the 1raders in are a0are a)out the commodity future
Mar2et
• Eardly 36D traders are invested in the commodity future mar2et
• Most of the investors are not ready to invest in commodity future mar2et they feel it
involve high ris2.
• Returns and the Ris2 of the commodity are the most critical factors3 0hich
1raders 0ill consider 0hile investing in any commodity
• Most of the investors are ready to invest in commodity future mar2et if proper
information is provided
• "s commodity future mar2et is ne0 and emerging 3many investors and farmers are
not fully a0are of this mar2et .as the mar2et helps to trade transparently 0ithout
middlemen and agents
• Fhile finding the reasons 0hy most of the people are not trading in commodity
mar2et found that many respondents are not interested at all in this trade this is
)ecause of unana0areness 4 mythical perception a)out commodity mar2et.
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Awareness of commodity market with reference Derivative investors
S!,,"STION
• 1here is need to create a0areness a)out commodity $uture Mar2et. "0areness
program has to )e conducted )y ,arvy consultants3 )ecause since this 0as ne0 to the
mar2et .so it can )e done through )y giving advertisements in local channels3
?e0spapers3 )y sending E8mail to present customers etc
• $rom survey it is found that most of the potential customers are concerned a)out the
(ro2erage charges so ,arvy can loo2 upon this. f it can charge moderate )ro2erage
it 0ill help to attract more and more customers.
• More agents and mar2eting executives should )e appointed to educate the customers
)ecause the customers having many myths in there mind
• "nd also create the a0areness of electronic commodity trading
• $irm should approach people 0ho are already into the )usiness of commodities
.special campaigns G investors meets should )e conducted for these people since they
are a0are of rate fluctuation 3mar2et trends etc . 1hey have got mar2et idea that
)enefits them in price prediction. 1hey 0ill )e in high spirits 0hen price ris2 of them
0ill )e managed.
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Awareness of commodity market with reference Derivative investors
Company
Bvervie0
"nd
nformation
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Awareness of commodity market with reference Derivative investors
O%PAN& PRO0IL"
1he )irth of ,arvy 0as on a modest scale in 1'&1. t )egan 0ith the vision and
enterprise of a small group of practicing Chartered "ccountants 0ho founded the flagship
company H,arvy Consultants Cimited. Fe started 0ith consulting and financial
accounting automation3 and carved inroads into the field of registry and share accounting
)y 1'&!. Since then3 0e have utili5ed our experience and superlative expertise to go from
strength to strengthHto )etter our services3 to provide ne0 ones3 to innovate3 diversify
and in the process3 evolved ,arvy as one of ndiaIs premier integrated financial service
enterprise.
1hus over the last 26 years ,arvy has traveled the success route3 to0ards )uilding
a reputation as an integrated financial services provider3 offering a 0ide spectrum of
services. "nd 0e have made this *ourney )y ta2ing the route of /uality service3 path
)rea2ing innovations in service3 versatility in service and finally totality in services.
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Awareness of commodity market with reference Derivative investors
Bur highly /ualified manpo0er3 cutting8edge technology3 comprehensive
infrastructure and total customer8focus has secured for us the position of an emerging
financial services giant en*oying the confidence and support of an envia)le clientele
across diverse fields in the financial 0orld.
Bur values and vision of attaining total competence in our servicing has served as
the )uilding )loc2 for creating a great financial enterprise3 0hich stands solid on our
fortresses of financial strength 8 our various companies.
Fith the experience of years of holistic financial servicing )ehind us and years of
complete expertise in the industry to loo2 for0ard to3 0e have no0 emerged as a premier
integrated financial services provider.
"nd today3 0e can loo2 0ith pride at the fruits of our mastery and experience
comprehensive financial services that are competently segregated to service and manage
a diverse range of customer re/uirements.
O$"R$I"1/
,"R-.3 is a premier integrated financial services provider3 and ran2ed among
the top five in the country in all its )usiness segments3 services over 1# million individual
investors in various capacities3 and provides investor services to over 366 corporate3
comprising the 0ho is 0ho of Corporate ndia. ,"R-. covers the entire spectrum of
financial services such as Stoc2 )ro2ing3 9epository 7articipants3 9istri)ution of
financial products 8 mutual funds3 )onds3 fixed deposit3 e/uities3 nsurance (ro2ing3
Commodities (ro2ing3 7ersonal $inance "dvisory Services3 Merchant (an2ing 4
Corporate $inance3 placement of e/uity3 7Bs3 among others. ,arvy has a professional
management team and ran2s among the )est in technology3 operations and research of
various industrial segments.
$a-)e and $ision of 2arvy Stock 3rokin4 Ltd/
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Awareness of commodity market with reference Derivative investors
+Bur values and vision of attaining total competence in our servicing has served
as the )uilding )loc2 for creating a great financial enterprise3 0hich stands solid on our
fortress of financial strength J our various companiesK.
The 2arvy redo/
O)r -ients O)r 0oc)s
Clients are the reason for our )eing. 7ersonali5ed service3 professional careL pro8
activeness are the values that help us nurture enduring relationships 0ith our clients.
Res*ect for the Individ)a-
Each and every individual is an essential )uilding )loc2 of our organi5ation.
Fe are the 2iln that hones individuals to perfection. (e they our employees3 shareholders
or investors. Fe do so )y upholding their dignity 4 pride3 inculcating trust and achieving
a sensitive )alance of their professional and personal lives.
Teamwork
?one of us is more important than all of us.Each team mem)er is the face of
,arvy. 1ogether 0e offer diverse services 0ith speed3 accuracy and /uality to deliver
only one product> excellence. 1ransparency3 co8operation3 invalua)le individual
contri)utions for a collective goal3 and respecting individual uni/ueness 0ithin a
corporate 0hole3 is ho0 0e deliver again and again.
Res*onsi'-e iti.enshi*
" social )alance sheet is as re0arding as a )usiness one. "s a responsi)le corporate
citi5en3 our duty is to foster a )etter environment in the society 0here 0e live and 0or2.
")iding )y its norms3 and )ehaving responsi)ly to0ards the environment3 is some of our
gro0ing initiatives to0ards reali5ing it.
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Awareness of commodity market with reference Derivative investors
Inte4rity
Everything else is secondary
7rofessional and personal ethics are our )edroc2. Fe ta2e pride in an environment that
encourages honesty and the opportunity to learn from failures than camouflage them. Fe
insist on consistency )et0een 0or2s and action
A'o)t 2AR$& ,ro)*/
A'o)t 2AR$& ,ro)*
,arvy has traveled the success route3 to0ards )uilding a reputation as an
integrated financial services provider3 offering a 0ide spectrum of services for over 26
years.
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Awareness of commodity market with reference Derivative investors
,arvy3 a name long committed to service at its )est. " fame ac/uired through the
range of corporate and retail services including mutual funds3 fixed income3 e/uity
investments3 insurance HHH to name a fe0. Bur values and vision of attaining total
competence in our servicing has served as a )uilding )loc2 for creating a great financial
enterprise.
1he )irth of ,arvy 0as on a modest scale in the year 1'&2. t )egan 0ith the
vision and enterprise of a small group of practicing Chartered "ccountants )ased in
Eydera)ad3 0ho founded ,arvy. Fe started 0ith consulting and financial accounting
automation3 and then carved inroads into the field of Registry and Share 1ransfers.
Since then3 0e have utili5ed our /uality experience and superlative expertise to go
from strength to strength to provide )etter and ne0 services to the investors. "nd today3
0e can loo2 0ith pride at the fruits of our experience into comprehensive financial
services provider in the Country.
2AR$& ,ro)* om*anies are/
2arvy ons)-tants Limited
1he first securities registry to receive SB '662 certification in ndia. Registered 0ith
SE( as Category Registrar3 is ?um)er 1 Registrar in the Country. 1he a0ard of )eing
MMost "dmiredI Registrar is one among many of the ac2no0ledgements 0e received for
our customer friendly and competent services.
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Awareness of commodity market with reference Derivative investors
2arvy Stock 3rokin4 Limited
1he company3 Mem)er of ?ational Stoc2 Exchange ;?SE " Eedger pay more to the farmer or dealer of a produce if its prices go
up. $or protection against higher prices of the produce3 he hedges the ris2 exposure )y
)uying enough future contracts of the produce to cover the amount of produce he expects
to )uy. Since cash and futures prices do tend to move in tandem3 the futures position 0ill
profit if the price of the produce rise enough to offset cash loss on the produce.
S*ec)-ators/ Speculators are participants 0ho )et on future movements in the price of
an asset i.e. commodity to ma2e short term gain from the price movements.
Commodity future s gives theme the leverage so to ta2e ris2s on nominal margin
payments and there)y increasing for )igger gains or losses. Speculators are some 0hat
li2e a middle man. 1hey are never interested in actual o0ing the commodity. 1hey 0ill
*ust )uy from one end and sell it to the other in anticipation of future price movements.
1hey actually )et on the future movement in the price of an asset.
1hey are the second ma*or group of futures players. 1hese participants include
independent floor traders and investors. 1hey handle trades for their personal clients or
)ro2erage firms.
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Awareness of commodity market with reference Derivative investors
(uying a futures contract in anticipation of price increases is 2no0n as Mgoing longI.
Selling a futures contract in anticipation of a price decrease is 2no0n as Mgoing shortI.
Speculative participation in futures trading has increased 0ith the availa)ility of
alternative methods of participation.
S*ec)-ators have certain advanta4es over other investments they are as fo--ows/
f the traderIs *udgment is good3 he can ma2e more money in the futures mar2et faster
)ecause prices tend3 on average3 to change more /uic2ly than real estate or stoc2 prices.
$utures are highly leveraged investments. 1he trader puts up a small fraction of the value
of the underlying contract as margin3 yet he can ride on the full value of the contract as it
moves up and do0n. 1he money he puts up is not a do0n payment on the underlying
contract3 )ut a performance )ond. 1he actual value of the contract is only exchanged on
those rare occasions 0hen delivery ta2es place.
Ar'itra4e)rs/ "r)itrageurs 0or2 at ma2ing profits )y ta2ing advantaged of existence of
difference in prices of the same product across different mar2ets ;MC@ and ?C9E@
• 1he 0hole sellers in most situations3 acted as mere parasites 0ho did not add any
value to the product )ut raised its price 0hich 0as eventually faced )y the
consumers.
• 1he improvement in transport facilities made the retailers directly interact 0ith
the producers and hence the need for 0hole sellers 0as not felt.
n recent years3 the extent of the retai- market
oth organi5ed and unorgani5ed<
has evolved in leaps and )ounds. n fact3 the success stories of the commodity market of
ndia in recent years has mainly centered around the gro0th generated )y the Retai-
Sector. "lmost every commodity under the sun )oth agricultural and industrial is no0
)eing provided at 0ell distri)uted retail outlets throughout the country.
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Awareness of commodity market with reference Derivative investors
Moreover3 the retail outlets )elong to )oth the organi5ed as 0ell as the
unorgani5ed sector. 1he )nor4ani.ed retai- o)t-ets of the yesteryears consist of small
shop o0ners 0ho are price ta2ers 0here consumers face a highly competitive price
structure. 1he or4ani.ed sector on the other hand is o0ned )y various )usiness houses
li2e 7antaloons3 Reliance3 1ata and others. Such mar2ets are usually sell a 0ide range of
articles )oth agricultural and manufactured3 edi)le and inedi)le3 perisha)le and dura)le.
Modern mar2eting strategies and other techni/ues of sales promotion ena)le such
mar2ets to dra0 customers from every section of the society. Eo0ever the gro0th of such
mar2ets has still centered on the ur)an areas primarily due to infrastructural limitations.
Considering the present gro0th rate3 the total valuation of the Indian Retai-
%arket is estimated to cross Rs. 163666 )illion )y the year 2616. 9emand for
commodities is li2ely to )ecome four times )y 2616 than 0hat it presently is.
1hat can commodity market offer8
f you are an investor3 commodities futures represent a good form of investment
)ecause of the follo0ing reasons..
• +i4h Levera4e J 1he margins in the commodity futures mar2et are less than the
$4B section of the e/uity mar2et.
• Less %ani*)-ations 8 Commodities mar2ets3 as they are governed )y international
price movements are less prone to rigging or price manipulations.
• Diversification J 1he returns from commodities mar2et are free from the direct
influence of the e/uity and de)t mar2et3 0hich means that they are capa)le of )eing used
as effective hedging instruments providing )etter diversification.
f you are an importer or an exporter3 commodities futures can help you in the follo0ing
0aysH
• +ed4e a4ainst *rice f-)ct)ations J Fide fluctuations in the prices of import or
export products can directly affect your )ottom8line as the price at 0hich you
importGexport is fixed )efore8hand. Commodity futures help you to procure or sell the
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Awareness of commodity market with reference Derivative investors
commodities at a price decided months )efore the actual transaction3 there)y ironing out
any change in prices that happen su)se/uently.
f you are a producer of a commodity3 futures can help you as follo0s>
• Lock6in the *rice for yo)r *rod)ce J f you are a farmer3 there is every chance that
the price of your produce may come do0n drastically at the time of harvest. (y ta2ing
positions in commodity futures you can effectively loc28in the price at 0hich you 0ish to
sell your produce
• Ass)red demand J "ny glut in the mar2et can ma2e you 0ait unendingly for a
)uyer. Selling commodity futures contract can give you assured demand at the time of
harvest.
f you are a large scale consumer of a product3 here is ho0 this mar2et can help you>
• ontro- yo)r cost J f you are an industrialist3 the ra0 material cost dictates the final
price of your output. "ny sudden rise in the price of ra0 materials can compel you to pass
on the hi2e to your customers and ma2e your products unattractive in the mar2et. (y
)uying commodity futures3 you can fix the price of your ra0 material.
• "ns)re contin)o)s s)**-y J "ny shortfall in the supply of ra0 materials can stall
your production and ma2e you default on your sale o)ligations. .ou can avoid this ris2
)y )uying a commodity futures contract )y 0hich you are assured of supply of a fixed
/uantity of materials at a pre8decided price at the appointed time.
1he effective mechanism of settlement and delivery procedures adopted and
employed )y MC@ has once again undergone rigorous tests and have come out extremely
successful. 1his is signified 0ith the surging trading volume in )ullion contracts and high
open interest entering the settlement period resulting in healthy /uantities getting
physically delivered. 1his 0hole process underscores the efficacy 4 transparency of the
complete trading3 settlement and delivery process employed )y MC@.
1he complete delivery procedure right from getting the possession of the precious
metal from the sellers3 necessary /uality certifications3 consignment movement3 handing
over the precious metal to the )uyers3 etc 0as completed in flat ! days period. 1he
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Awareness of commodity market with reference Derivative investors
complete process has )een 0or2ed out at a very optimal cost and on an average each
participant involved in the delivery process had incurred only Rs. 3!6G8 per transaction.
Fhen the MC@ =old Contract entered into settlement period the Bpen nterest in
=old 0as #%6 ,gs after reducing from over 4666 ,gs fe0 days ago. 1his open interest
resulted in 1!2 ,gs of gold getting delivered and the )alance gold3 0hich entered into the
delivery period3 0as s/uared up. 1he total volume in MC@ =old 9ecem)er futures
contract 0as 236233 ,gs valuing around Rs. 14!%% crores.
Bn the same pattern Bpen nterest in Silver 0as 1#3%46 ,gs after reducing from over
13#63666 ,gs fe0 days )ac2. Eo0ever3 the actual delivery in Silver 0as 123#'& 2gs and
the )alance Silver that entered into the delivery period 0as s/uared up. 1he total volume
in MC@ Silver 9ecem)er futures contract 0as 22'!6 M. 1ons valuing around Rs. 2!624
crores.
n all the previous settlements also MC@ platform has al0ays seen appropriate
percentage of open interest position resulting in physical delivery. =old has seen a
cumulative physical delivery of 24! ,gs and Silver 21'6 ,gs across all the settlements
completed )efore the current settlement.
=old 4 silver futures contracts are getting recogni5ed as the most relia)le 4
dependa)le investment options that are today availa)le to traders and investors 0ho are
loo2ing to 0iden their portfolio )eyond e/uity instruments. 1his is )ecause of the
credi)ility that these commodities have en*oyed glo)ally and the technical 4 fundamental
analysis that has gone in arriving at various trading strategies.
ndia is the largest importer for =old in the 0orld3 around &66 tons per year3 reali5ing this
potential of =old3 =overnment of ndia has set up a committee to examine the regulatory
structure of the gold industry to ma2e ndia a gold trading hu). 1his committee is
constituted under the Chairmanship of Secretary3 9epartment of Commerce3 and Ministry
of Commerce 4 ndustry. MC@ is a mem)er of the committee and loo2s for0ard to
contri)uting suggestions on the role that $utures mar2et can play in ma2ing ndia a glo)al
gold trading hu).
1he first meeting for the =old Committee is )eing held under the Chairmanship
of Commerce Secretary on 16th 9ecem)er 2664.
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Awareness of commodity market with reference Derivative investors
Pro'-ems 0acin4 'y ommodity 0)t)re market
1. 1he spotGphysical mar2ets are fragmented. 1his may )e )ecause of the
restrictions on the free movement of commodities in the physical form under the
Essential Commodities "ct3 "7MC "ct3 Cicensing restrictions3 etc. Eence3 the
creation of an integrated and vi)rant domestic mar2et for physical trading in
commodities 0ith ade/uate infrastructure and transparent trading system is a pre8
re/uisite for )road )ased commodity derivatives mar2ets.
2. Cac2 of mechanism for standardi5ation of 0arehousing receipts. 1he a)sence of
the regulatory authority for accreditation of 0arehouses and for setting standards for
scientific grading3 pac2aging3 storage and preservation. "s a result3 though (an2s
grant credit against 0arehouse receipts no03 they are largely restricted to the ones
issued )y the Central Farehousing Corporation and those promoted )y the State
=overnments. Eo0ever3 this pro)lem is )eing sorted out )y the $ood Ministry3
0hich is in the process of drafting a Farehouse 9evelopment and Regulation "ct to
promote 0arehouse receipts8)ased lending and commodity derivative transactions.
3. 9emateriali5ed settlement system for commodities 0hich has the standardi5ation
of 0arehouse receipts as a pre8re/uisite. " system of physical delivery of
commodities )ac2ed )y 0arehouse receipt system can help eliminate the /uality ris2
and price ris2. t 0ill facilitate seamless nation 0ide spot mar2et for commodities.
4. Creation of depository system for electronically facilitating transfer and delivery
of commodities in demateriali5ed form.
!. ?eed to ma2e 0arehouse receipts transfera)le. Fe understand that a )ill to
amend the $or0ard Contracts ;Regulation< "ct3 1'!2 is slated to )e ta2en up during
the current )udget session of the 7arliament3 0hich proposes to permit the
transfera)ility of 0arehouse receipts )y scrapping Section 1&;2< of the "ct. 1his 0ill
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Awareness of commodity market with reference Derivative investors
also easy access to finance from )an2s and financial institutions against produce
stored in 0arehouses.
#. Most of the commodity exchanges function as speciali5ed product )ourses. 1his
is even true of the national multi commodity exchanges )ecause of lac2 of volumes
in many commodities in spite the trading )eing allo0ed in many formally. Fhile
?C9E@ technically trades in 3! commodities3 a)out '6 per cent of its volume comes
from *ust & products. n case of MC@3 gold and silver account for a ma*or share in
the trading volume3 though it trades in 41 commodities. 7epper3 cardamom3 ru))er3
coffee and *ute products are the five products that are prominently traded in ?MCE
even though a)out !' commodities are traded here. 1his may )e attri)uted to the fact
that there are different players for different commodities.
%. 1here are no uniform contract specifications for the same commodity traded on
various exchanges. "s a result3 there is no proper mechanism to assess price of the
same commodity across various exchanges3 as price depends on the contract
specification.
&. Bnline trading at the national level is mandatory only in respect of ?ational level
multi commodity exchanges3 0hile such a compulsion is not applica)le to the
regional ones. Eence transparency suffers.
'. 9emutuali5ation is yet to happen completely. Many exchanges are associations of
mem)ers 0ho retain trading rights and o0nership. 1his interest of the promoters as
traders has serious implications for the integrity of these exchanges.
16. Residents in ndia3 engaged in import and export trade3 may hedge the price ris2
of commodities in the international commodity exchangesGmar2ets. "pplications for
commodity hedging are to )e for0arded to R(. " one8time approval 0ill )e given
)y R( along 0ith the guidelines for underta2ing this activity. 1he Reserve (an2 of
ndia3 0hich is considering a proposal to grant )lan2et approval to ndian companies
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Awareness of commodity market with reference Derivative investors
that have an exposure to commodities to freely hedge in the international exchanges3
must also ensure that they use the products availa)le in the ndian commodity
derivatives mar2ets.
11. Bptions trading in commodities are prohi)ited as of no0 0hich puts constraints
on the mar2ets. ntroduction of options trading in commodities is a necessary
condition for institutional investors to trade in commodity derivatives trading3 as this
0ould ma2e it easier for the institutional investors to convert the commodity
derivatives products as financial products.
f the institutional investors3 li2e )an2s and mutual funds3 0hose presence as of no0 is
only in capital mar2ets need to start operating in commodity derivatives mar2ets as 0ell
then these additional issues are also re/uired to )e addressed.
12. Convergence of the regulators of capital mar2ets and commodity mar2ets is a pre8
re/uisite for free flo0 of funds )et0een mar2ets.
13. 1he players in capital mar2ets must ac/uire the re/uired expertise for trading in
commodity mar2ets and vice versa to have an integrated vie0 of all mar2ets.
1hy are ommodity Derivatives Re9)ired8
ndia is among the top8! producers of most of the commodities3 in addition to
)eing a ma*or consumer of )ullion and energy products. "griculture contri)utes a)out 22D to
the =97 of the ndian economy. t employees around !%D of the la)or force on a total of 1#3
million hectares of land. "griculture sector is an important factor in achieving a =97 gro0th
of &816D. "ll this indicates that ndia can )e promoted as a ma*or center for trading of
commodity derivatives.
t is unfortunate that the policies of $MC during the most of 1'!6s to 1'&6s
suppressed the very mar2ets it 0as supposed to encourage and nurture to gro0 0ith times. t
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Awareness of commodity market with reference Derivative investors
0as a mista2e other emerging economies of the 0orld 0ould 0ant to avoid. Eo0ever3 it is
not in ndia alone that derivatives 0ere suspected of creating too much speculation that
0ould )e to the detriment of the healthy gro0th of the mar2ets and the farmers. Such
suspicions might normally arise due to a misunderstanding of the characteristics and role of
derivative product.
t is important to understand 0hy commodity derivatives are re/uired and the role they
can play in ris2 management. t is common 2no0ledge that prices of commodities3 metals3
shares and currencies fluctuate over time. 1he possi)ility of adverse price changes in future
creates ris2 for )usinesses. 9erivatives are used to reduce or eliminate price ris2 arising from
unforeseen price changes. " derivative is a financial contract 0hose price depends on3 or is
derived from3 the price of another asset.
10o important derivatives are futures and options.
(i) Commodity Futures Contracts/
" futures contract is an agreement for )uying or selling a Commodity for a
predetermined delivery price at a specific future time. $utures are standardi5e contracts that
are traded on organi5ed futures exchanges that ensure performance of the contracts and thus
remove the default ris2. 1he commodity futures have existed since the Chicago (oard of
BABASAB PATIL MBA FINANCE PROJECT REPORT Page !2
Awareness of commodity market with reference Derivative investors
1rade ;C(B13 000.c)ot.com< 0as esta)lished in 1&4& to )ring farmers and merchants
together. 1he ma*or function of futures mar2ets is to transfer price ris2 from hedgers to
speculators. $or example3 suppose a farmer is expecting his crop of 0heat to )e ready in t0o
months time3 )ut is 0orried that the price of 0heat may decline in this period. n order to
minimi5e his ris23 he can enter into a futures contract to sell his crop in t0o monthsI time at a
price determined no0. 1his 0ay he is a)le to hedge his ris2 arising from a possi)le adverse
change in the price of his commodity.
(ii) Commodity Options contracts:
Ci2e futures3 options are also financial instruments used for hedging and
speculation. 1he commodity option holder has the right3 )ut not the o)ligation3 to )uy ;or
sell< a specific /uantity of a commodity at a specified price on or )efore a specified date.
Bption contracts involve t0o parties J the seller of the option 0rites the option in favour of
the )uyer ;holder< 0ho pays a certain premium to the seller as a price for the option. 1here
are t0o types of commodity options> a McallI option gives the holder a right to )uy a
commodity at an agreed price3 0hile a MputI option gives the holder a right to sell a
commodity at an agreed price on or )efore a specified date ;called expiry date $rom the a)ove diagram 0e can say that out of 166 traders only 3'D
have invested in commodity mar2et #1D have not invested in commodity mar2et so even
though the most of the traders are a0are a)out Commodity $uture mar2et they are not
trading in $uture mar2et traders feel there is a high ris2 involved in the future mar2et.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %2
Awareness of commodity market with reference Derivative investors
how do you came to know about commodity market
(1 (1.0 (1.0 (1.0
12 12.0 12.0 73.0
9 9.0 9.0 '2.0
1' 1'.0 1'.0 100.0
100 100.0 100.0
not atte$pted
frnds1colleauges
bill boards1advt1brochure
agents
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
ho* do !ou ca$e to ,no* about co$$odit! $ar,et
1'.0%
9.0%
12.0%
(1.0%
agents
bill boards1advt1bro
frnds1colleauges
not atte$pted
Inter*retation> most of the investors came to 2no0 a)out the commodity )y agents the
respondents 0ho have invested in commodity mar2et from them 1&D of the people came
to 2no0 )y agents 3'D from the )ill )oards GadvertisementG)rochure 412D people came
to 2no0 )y there friends and colleagues. Eere not attempted indicates the people 0ho
have not invested in commodity mar2et have not attempted this /uestion.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %3
Awareness of commodity market with reference Derivative investors
commodity you prefer for trading
(4 (4.0 (4.0 (4.0
10 10.0 10.0 74.0
5 5.0 5.0 79.0
1( 1(.0 1(.0 95.0
5 5.0 5.0 100.0
100 100.0 100.0
not atte$pted
&gro products
+ase $etals
"recious $etals
2nerg! products
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %4
Awareness of commodity market with reference Derivative investors
co$$odit! !ou prefer for trading
5.0%
1(.0%
5.0%
10.0%
(4.0%
2nerg! products
"recious $etals
+ase $etals
&gro products
not atte$pted
Inter*retation> among the persons 0ho have invested in commodity in them 16D prefer
to trade in agro products3 !D in )ase metals3 1#D in precious metals 4 ! D in energy
products .here not attempted indicates the people 0ho have not invested in commodity
mar2et have not attempted this /uestion.
Factors considered while trading in commodity market
(5 (5.0 (5.0 (5.0
3 3.0 3.0 ('.0
' '.0 '.0 7(.0
13 13.0 13.0 '9.0
11 11.0 11.0 100.0
100 100.0 100.0
not atte$pted
price
season
ris,
return
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %!
Awareness of commodity market with reference Derivative investors
Factors considered *hile trading in co$$odit! $ar,et
11.0%
13.0%
'.0%
3.0%
(5.0%
return
ris,
season
price
not atte$pted
Inter*retation/ Most of the investors consider 11D of return313D of ris233D price4 &D
of season. Fhile investing in commodities mainly they considered returns 4 ris2 0hile
investing in commodity mar2et they mainly consider returns 4 ris2. here not attempted
indicates the people 0ho have not invested in commodity mar2et have not attempted this
/uestion.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %#
Awareness of commodity market with reference Derivative investors
commodity future mkt provides benefit
(2 (2.0 (2.0 (2.0
9 9.0 9.0 71.0
10 10.0 10.0 '1.0
1' 1'.0 1'.0 99.0
1 1.0 1.0 100.0
100 100.0 100.0
not atte$ted
strongl! agree
agree
neutral
disagree
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
co$$odit! future $,t provides benefit
1.0%
1'.0%
10.0%
9.0%
(2.0%
disagree
neutral
agree
strongl! agree
not atte$ted
Inter*retation/ most of the investors say it is in neutral position 4 some 0ho are
)enefited lot they 0ill go for factors li2e agree 4 strongly agree 4 percentage of
disagree is very less among invested people
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %%
Awareness of commodity market with reference Derivative investors
Reasons why they have not invested in commodity mkt
39 39.0 39.0 39.0
5 5.0 5.0 44.0
10 10.0 10.0 54.0
7 7.0 7.0 (1.0
33 33.0 33.0 94.0
( (.0 (.0 100.0
100 100.0 100.0
those *ho hv invested
3ot intersted
.nfo non availabilit!
high invest$ent
co$ple4 understanding
high ris,
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
-easons *h! the! have not invested in co$$odit! $,t
(.0%
33.0%
7.0%
10.0%
5.0%
39.0%
high ris,
co$ple4 understandin
high invest$ent
.nf o non availabilit
3ot intersted
those *ho hv investe
Inter*retation/ 1he a)ove pie chart sho0s that most of the traders are not interested to
invest in Commodity $uture Mar2et due to complex understanding involved in it around
33D of the traders are given this reason and !D of them are not interested in investing in
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %&
Awareness of commodity market with reference Derivative investors
this mar2et3 # 4 %D thin2 that it involves high ris2 and high investment So there is great
need to create a0areness a)out Commodity $uture mar2et )y telling its advantages.
planning for trading in commodity mkt in future
(7 (7.0 (7.0 (7.0
33 33.0 33.0 100.0
100 100.0 100.0
!es
no
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
planning for trading in co$$odit! $,t in future
33.0%
(7.0%
no
!es
Inter*retation> $rom the a)ove graph 0e conclude that most of the traders are interested
to invest in Commodity $uture Mar2et if proper a0areness is created among them and
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %'
Awareness of commodity market with reference Derivative investors
other 33D are not interested to invest .1hese #%D of traders are the potential customers
for the company.
0indin4s
• More than !6D of the 1raders in are a0are a)out the commodity future
Mar2et
• Eardly 36D traders are invested in the commodity future mar2et
• Most of the investors are not ready to invest in commodity future mar2et they feel it
involve high ris2.
• Returns and the Ris2 of the commodity are the most critical factors3 0hich
1raders 0ill consider 0hile investing in any commodity
• Most of the investors are ready to invest in commodity future mar2et if proper
information is provided
• "s commodity future mar2et is ne0 and emerging 3many investors and farmers are
not fully a0are of this mar2et .as the mar2et helps to trade transparently 0ithout
middlemen and agents
• Fhile finding the reasons 0hy most of the people are not trading in commodity
mar2et found that many respondents are not interested at all in this trade this is
)ecause of una0areness 4 mythical perception a)out commodity mar2et.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &6
Awareness of commodity market with reference Derivative investors
• Most of the respondents are 0ere from government service 4 )usiness men
S)44estion
• 1here is need to create a0areness a)out commodity $uture Mar2et. "0areness
program has to )e conducted )y ,arvy consultants3 )ecause since this 0as ne0 to the
mar2et .so it can )e done through )y giving advertisements in local channels3
?e0spapers3 )y sending E8mail to present customers etc
• $rom survey it is found that most of the potential customers are concerned a)out the
(ro2erage charges so ,arvy can loo2 upon this. f it can charge moderate )ro2erage
it 0ill help to attract more and more customers.
• More agents and mar2eting executives should )e appointed to educate the customers
)ecause the customers having many myths in there mind
• "nd also create the a0areness of electronic commodity trading
• $irm should approach people 0ho are already into the )usiness of commodities
.special campaigns G investors meets should )e conducted for these people since they
are a0are of rate fluctuation 3mar2et trends etc . 1hey have got mar2et idea that
)enefits them in price prediction. 1hey 0ill )e in high spirits 0hen price ris2 of them
0ill )e managed.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &1
Awareness of commodity market with reference Derivative investors
ONL!SION
Commodity futures mar2ets are ne0 and emerging mar2et. 1he a0areness of the mar2et
is very less among the investors 0ho can use this trade to sell there products 0ithout the
middlemen or agents it also help the actual )uyers too. Eere trader also can transfer his
ris2 to some other 0ho can handle it or can appetite the ris2 through hedging techni/ues
Compared to capital mar2et commodity mar2et is less ris2y in
volatility context here the prices do not change 0ithin a fraction of second .significantly3
minimum margin ready physical possession3 no manipulation 4 fraud3 maximum
profita)ility is availa)le over here since the commodity mar2et helps all such as farmers3
industries and individuals investors it is gro0ing at a faster rate in glo)al outloo2.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &2
Awareness of commodity market with reference Derivative investors
BIBLOGRAPHY
News Papers;
? Business Line
? Economic times
? Times of India
1e' site
? 000.moneycontrol.com
? 000.google.com
? [email protected]
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &3
Awareness of commodity market with reference Derivative investors
? [email protected]
Te7t 'ooks
$utures 4 Bptions second addition )y -ohra 4 (agri
5!"STIONNAIR"
NA%" / ::::::::::::::::::::::::::::::::::
A," / ::::::::::::::::::::::::::::::::::
ADDR"SS / ::::::::::::::::::::::::::::::::::
ONTAT NO/ ::::::::::::::::::::::::::::::::::
1< Fhich of the follo0ing 0ill )est descri)e your occupation
;?ote> please tic2 )elo0 the option you 0ant to choose<
3)siness Profession ,ovt.services Private service Others s*ecify
2< Fhat is your annual incomeT
3e-ow ;
A PROJECT REPORT ON
“Awareness of commodity market with reference Derivative investors”
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 1
Awareness of commodity market with reference Derivative investors
CONTENTS
SL.NO PARTI!LARS
1. Executive Summary
2. Research Methodology
3. Company profile
4. ntroduction to the topic
!. "nalysis and interpretation
#. $indings
%. Suggestions
&. Conclusion
'. (i)liography
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 2
Awareness of commodity market with reference Derivative investors
"#"!TI$" S!%%AR&
" pro*ect report containing the +“Awareness of commodity market with
reference to Derivative investors ” a case study of (elgaum city "t ,"R-. $inapolis
(elgaum for fulfillment of re/uirement of M(" -th semester in nstitute of
Management Education and research. t 0as an opportunity to learn the practical aspects
of the firm
O'(ectives of the st)dy
1. 1o 2no0 the perception of derivative investors to0ards commodity future mar2et
2. 1o find the a0areness level of commodity mar2et in (elgaum city
3. 1o understand the commodity mar2et and its 0or2ing mechanism.
4. 1o 2no0 0hich commodity they prefer to invest.
!. 1o find the potential customer for commodity mar2et
1he pro*ect 0as underta2en at ,"R-. $inapolis (elgaum the first part of the study
is done )y collected information through net3 *ournals3 text)oo2s. "nd second part of the
study is conducted through survey of the derivative investors.
Sco*e of the st)dy
1his study is limited to only (elgaum City the study is carried out to 2no0 the
a0areness level of derivative investors to0ards Commodity $utures mar2et. 1his study
also helps to 2no0 a)out trading mechanism of Commodity Mar2et 4 the future trading
level.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 3
Awareness of commodity market with reference Derivative investors
R"S"AR+ %"T+ODOLO,&
Tit-e of the Pro(ect
“Awareness of commodity market with reference to Derivative investors”
Sam*-e Si.e
1he sample si5e is consist of traders in derivative mar2et of (elgaum city.166
random sample 0as ta2en to identify the a0areness level of the derivative investors
to0ards Commodity $uture Mar2et
Sam*-e Ty*e / Simple random sampling 0as adopted to select respondents.
Sam*-e Area / (elgaum city
D)ration of Pro(ect/
st 7hase 8 9ecem)er
nd 7hase 8 :anuary to "pril ;0ee2ly t0o days<
TOOLS !S"D 0OR ANAL&SIS/
1. =raphical Representation of "nalysis through S7SS. >
a. 7ie charts
DATA OLL"TION APPROA+/
7rimary data has )een used to carry out the research successfully. 1he secondary
data has )een collected from ?9E@ and MC@. $or the purpose of gathering primary data
a structure and /uestionnaire 0as designed to collect data from the derivative investors.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 4
Awareness of commodity market with reference Derivative investors
%ethod of omm)nication>
n order to minimi5e the )ias in data collection3 the method of personal intervie0 0as
adopted.
T+" SO!R"S O0 T+" DATA OLL"TION AR" AS 0OLLO1S
1he study relies to a great extent on primary data and to some extent on secondary data>
Primary Data/
• Auestionnaire
• B)servation and intervie0 techni/ue
Secondary Data/
• nformation is collected through internet
• $rom various text )oo2s
urnals and maga5inesLI%ITATION O0 T+" ST!D&/
? Since the study is )ased on the convenient sampling it may not depict the accurate
outcome
? Cevel of accuracy of results of research is restricted to the accuracy level 0ith
0hich the customers have given ans0ers and the accuracy level of the ans0er
cannot )e predicted
? 1he findings are )ased solely on the information provided )y the respondents and
there is a possi)ility of )iased results
? 1he study of pro*ect is limited to only (elgaum
BABASAB PATIL MBA FINANCE PROJECT REPORT Page !
Awareness of commodity market with reference Derivative investors
0INDIN,S
• More than !6D of the 1raders in are a0are a)out the commodity future
Mar2et
• Eardly 36D traders are invested in the commodity future mar2et
• Most of the investors are not ready to invest in commodity future mar2et they feel it
involve high ris2.
• Returns and the Ris2 of the commodity are the most critical factors3 0hich
1raders 0ill consider 0hile investing in any commodity
• Most of the investors are ready to invest in commodity future mar2et if proper
information is provided
• "s commodity future mar2et is ne0 and emerging 3many investors and farmers are
not fully a0are of this mar2et .as the mar2et helps to trade transparently 0ithout
middlemen and agents
• Fhile finding the reasons 0hy most of the people are not trading in commodity
mar2et found that many respondents are not interested at all in this trade this is
)ecause of unana0areness 4 mythical perception a)out commodity mar2et.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page #
Awareness of commodity market with reference Derivative investors
S!,,"STION
• 1here is need to create a0areness a)out commodity $uture Mar2et. "0areness
program has to )e conducted )y ,arvy consultants3 )ecause since this 0as ne0 to the
mar2et .so it can )e done through )y giving advertisements in local channels3
?e0spapers3 )y sending E8mail to present customers etc
• $rom survey it is found that most of the potential customers are concerned a)out the
(ro2erage charges so ,arvy can loo2 upon this. f it can charge moderate )ro2erage
it 0ill help to attract more and more customers.
• More agents and mar2eting executives should )e appointed to educate the customers
)ecause the customers having many myths in there mind
• "nd also create the a0areness of electronic commodity trading
• $irm should approach people 0ho are already into the )usiness of commodities
.special campaigns G investors meets should )e conducted for these people since they
are a0are of rate fluctuation 3mar2et trends etc . 1hey have got mar2et idea that
)enefits them in price prediction. 1hey 0ill )e in high spirits 0hen price ris2 of them
0ill )e managed.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %
Awareness of commodity market with reference Derivative investors
Company
Bvervie0
"nd
nformation
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &
Awareness of commodity market with reference Derivative investors
O%PAN& PRO0IL"
1he )irth of ,arvy 0as on a modest scale in 1'&1. t )egan 0ith the vision and
enterprise of a small group of practicing Chartered "ccountants 0ho founded the flagship
company H,arvy Consultants Cimited. Fe started 0ith consulting and financial
accounting automation3 and carved inroads into the field of registry and share accounting
)y 1'&!. Since then3 0e have utili5ed our experience and superlative expertise to go from
strength to strengthHto )etter our services3 to provide ne0 ones3 to innovate3 diversify
and in the process3 evolved ,arvy as one of ndiaIs premier integrated financial service
enterprise.
1hus over the last 26 years ,arvy has traveled the success route3 to0ards )uilding
a reputation as an integrated financial services provider3 offering a 0ide spectrum of
services. "nd 0e have made this *ourney )y ta2ing the route of /uality service3 path
)rea2ing innovations in service3 versatility in service and finally totality in services.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page '
Awareness of commodity market with reference Derivative investors
Bur highly /ualified manpo0er3 cutting8edge technology3 comprehensive
infrastructure and total customer8focus has secured for us the position of an emerging
financial services giant en*oying the confidence and support of an envia)le clientele
across diverse fields in the financial 0orld.
Bur values and vision of attaining total competence in our servicing has served as
the )uilding )loc2 for creating a great financial enterprise3 0hich stands solid on our
fortresses of financial strength 8 our various companies.
Fith the experience of years of holistic financial servicing )ehind us and years of
complete expertise in the industry to loo2 for0ard to3 0e have no0 emerged as a premier
integrated financial services provider.
"nd today3 0e can loo2 0ith pride at the fruits of our mastery and experience
comprehensive financial services that are competently segregated to service and manage
a diverse range of customer re/uirements.
O$"R$I"1/
,"R-.3 is a premier integrated financial services provider3 and ran2ed among
the top five in the country in all its )usiness segments3 services over 1# million individual
investors in various capacities3 and provides investor services to over 366 corporate3
comprising the 0ho is 0ho of Corporate ndia. ,"R-. covers the entire spectrum of
financial services such as Stoc2 )ro2ing3 9epository 7articipants3 9istri)ution of
financial products 8 mutual funds3 )onds3 fixed deposit3 e/uities3 nsurance (ro2ing3
Commodities (ro2ing3 7ersonal $inance "dvisory Services3 Merchant (an2ing 4
Corporate $inance3 placement of e/uity3 7Bs3 among others. ,arvy has a professional
management team and ran2s among the )est in technology3 operations and research of
various industrial segments.
$a-)e and $ision of 2arvy Stock 3rokin4 Ltd/
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 16
Awareness of commodity market with reference Derivative investors
+Bur values and vision of attaining total competence in our servicing has served
as the )uilding )loc2 for creating a great financial enterprise3 0hich stands solid on our
fortress of financial strength J our various companiesK.
The 2arvy redo/
O)r -ients O)r 0oc)s
Clients are the reason for our )eing. 7ersonali5ed service3 professional careL pro8
activeness are the values that help us nurture enduring relationships 0ith our clients.
Res*ect for the Individ)a-
Each and every individual is an essential )uilding )loc2 of our organi5ation.
Fe are the 2iln that hones individuals to perfection. (e they our employees3 shareholders
or investors. Fe do so )y upholding their dignity 4 pride3 inculcating trust and achieving
a sensitive )alance of their professional and personal lives.
Teamwork
?one of us is more important than all of us.Each team mem)er is the face of
,arvy. 1ogether 0e offer diverse services 0ith speed3 accuracy and /uality to deliver
only one product> excellence. 1ransparency3 co8operation3 invalua)le individual
contri)utions for a collective goal3 and respecting individual uni/ueness 0ithin a
corporate 0hole3 is ho0 0e deliver again and again.
Res*onsi'-e iti.enshi*
" social )alance sheet is as re0arding as a )usiness one. "s a responsi)le corporate
citi5en3 our duty is to foster a )etter environment in the society 0here 0e live and 0or2.
")iding )y its norms3 and )ehaving responsi)ly to0ards the environment3 is some of our
gro0ing initiatives to0ards reali5ing it.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 11
Awareness of commodity market with reference Derivative investors
Inte4rity
Everything else is secondary
7rofessional and personal ethics are our )edroc2. Fe ta2e pride in an environment that
encourages honesty and the opportunity to learn from failures than camouflage them. Fe
insist on consistency )et0een 0or2s and action
A'o)t 2AR$& ,ro)*/
A'o)t 2AR$& ,ro)*
,arvy has traveled the success route3 to0ards )uilding a reputation as an
integrated financial services provider3 offering a 0ide spectrum of services for over 26
years.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 12
Awareness of commodity market with reference Derivative investors
,arvy3 a name long committed to service at its )est. " fame ac/uired through the
range of corporate and retail services including mutual funds3 fixed income3 e/uity
investments3 insurance HHH to name a fe0. Bur values and vision of attaining total
competence in our servicing has served as a )uilding )loc2 for creating a great financial
enterprise.
1he )irth of ,arvy 0as on a modest scale in the year 1'&2. t )egan 0ith the
vision and enterprise of a small group of practicing Chartered "ccountants )ased in
Eydera)ad3 0ho founded ,arvy. Fe started 0ith consulting and financial accounting
automation3 and then carved inroads into the field of Registry and Share 1ransfers.
Since then3 0e have utili5ed our /uality experience and superlative expertise to go
from strength to strength to provide )etter and ne0 services to the investors. "nd today3
0e can loo2 0ith pride at the fruits of our experience into comprehensive financial
services provider in the Country.
2AR$& ,ro)* om*anies are/
2arvy ons)-tants Limited
1he first securities registry to receive SB '662 certification in ndia. Registered 0ith
SE( as Category Registrar3 is ?um)er 1 Registrar in the Country. 1he a0ard of )eing
MMost "dmiredI Registrar is one among many of the ac2no0ledgements 0e received for
our customer friendly and competent services.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 13
Awareness of commodity market with reference Derivative investors
2arvy Stock 3rokin4 Limited
1he company3 Mem)er of ?ational Stoc2 Exchange ;?SE " Eedger pay more to the farmer or dealer of a produce if its prices go
up. $or protection against higher prices of the produce3 he hedges the ris2 exposure )y
)uying enough future contracts of the produce to cover the amount of produce he expects
to )uy. Since cash and futures prices do tend to move in tandem3 the futures position 0ill
profit if the price of the produce rise enough to offset cash loss on the produce.
S*ec)-ators/ Speculators are participants 0ho )et on future movements in the price of
an asset i.e. commodity to ma2e short term gain from the price movements.
Commodity future s gives theme the leverage so to ta2e ris2s on nominal margin
payments and there)y increasing for )igger gains or losses. Speculators are some 0hat
li2e a middle man. 1hey are never interested in actual o0ing the commodity. 1hey 0ill
*ust )uy from one end and sell it to the other in anticipation of future price movements.
1hey actually )et on the future movement in the price of an asset.
1hey are the second ma*or group of futures players. 1hese participants include
independent floor traders and investors. 1hey handle trades for their personal clients or
)ro2erage firms.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 33
Awareness of commodity market with reference Derivative investors
(uying a futures contract in anticipation of price increases is 2no0n as Mgoing longI.
Selling a futures contract in anticipation of a price decrease is 2no0n as Mgoing shortI.
Speculative participation in futures trading has increased 0ith the availa)ility of
alternative methods of participation.
S*ec)-ators have certain advanta4es over other investments they are as fo--ows/
f the traderIs *udgment is good3 he can ma2e more money in the futures mar2et faster
)ecause prices tend3 on average3 to change more /uic2ly than real estate or stoc2 prices.
$utures are highly leveraged investments. 1he trader puts up a small fraction of the value
of the underlying contract as margin3 yet he can ride on the full value of the contract as it
moves up and do0n. 1he money he puts up is not a do0n payment on the underlying
contract3 )ut a performance )ond. 1he actual value of the contract is only exchanged on
those rare occasions 0hen delivery ta2es place.
Ar'itra4e)rs/ "r)itrageurs 0or2 at ma2ing profits )y ta2ing advantaged of existence of
difference in prices of the same product across different mar2ets ;MC@ and ?C9E@
• 1he 0hole sellers in most situations3 acted as mere parasites 0ho did not add any
value to the product )ut raised its price 0hich 0as eventually faced )y the
consumers.
• 1he improvement in transport facilities made the retailers directly interact 0ith
the producers and hence the need for 0hole sellers 0as not felt.
n recent years3 the extent of the retai- market
oth organi5ed and unorgani5ed<has evolved in leaps and )ounds. n fact3 the success stories of the commodity market of
ndia in recent years has mainly centered around the gro0th generated )y the Retai-
Sector. "lmost every commodity under the sun )oth agricultural and industrial is no0
)eing provided at 0ell distri)uted retail outlets throughout the country.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 4!
Awareness of commodity market with reference Derivative investors
Moreover3 the retail outlets )elong to )oth the organi5ed as 0ell as the
unorgani5ed sector. 1he )nor4ani.ed retai- o)t-ets of the yesteryears consist of small
shop o0ners 0ho are price ta2ers 0here consumers face a highly competitive price
structure. 1he or4ani.ed sector on the other hand is o0ned )y various )usiness houses
li2e 7antaloons3 Reliance3 1ata and others. Such mar2ets are usually sell a 0ide range of
articles )oth agricultural and manufactured3 edi)le and inedi)le3 perisha)le and dura)le.
Modern mar2eting strategies and other techni/ues of sales promotion ena)le such
mar2ets to dra0 customers from every section of the society. Eo0ever the gro0th of such
mar2ets has still centered on the ur)an areas primarily due to infrastructural limitations.
Considering the present gro0th rate3 the total valuation of the Indian Retai-
%arket is estimated to cross Rs. 163666 )illion )y the year 2616. 9emand for
commodities is li2ely to )ecome four times )y 2616 than 0hat it presently is.
1hat can commodity market offer8
f you are an investor3 commodities futures represent a good form of investment
)ecause of the follo0ing reasons..
• +i4h Levera4e J 1he margins in the commodity futures mar2et are less than the
$4B section of the e/uity mar2et.
• Less %ani*)-ations 8 Commodities mar2ets3 as they are governed )y international
price movements are less prone to rigging or price manipulations.
• Diversification J 1he returns from commodities mar2et are free from the direct
influence of the e/uity and de)t mar2et3 0hich means that they are capa)le of )eing used
as effective hedging instruments providing )etter diversification.
f you are an importer or an exporter3 commodities futures can help you in the follo0ing
0aysH
• +ed4e a4ainst *rice f-)ct)ations J Fide fluctuations in the prices of import or
export products can directly affect your )ottom8line as the price at 0hich you
importGexport is fixed )efore8hand. Commodity futures help you to procure or sell the
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 4#
Awareness of commodity market with reference Derivative investors
commodities at a price decided months )efore the actual transaction3 there)y ironing out
any change in prices that happen su)se/uently.
f you are a producer of a commodity3 futures can help you as follo0s>
• Lock6in the *rice for yo)r *rod)ce J f you are a farmer3 there is every chance that
the price of your produce may come do0n drastically at the time of harvest. (y ta2ing
positions in commodity futures you can effectively loc28in the price at 0hich you 0ish to
sell your produce
• Ass)red demand J "ny glut in the mar2et can ma2e you 0ait unendingly for a
)uyer. Selling commodity futures contract can give you assured demand at the time of
harvest.
f you are a large scale consumer of a product3 here is ho0 this mar2et can help you>
• ontro- yo)r cost J f you are an industrialist3 the ra0 material cost dictates the final
price of your output. "ny sudden rise in the price of ra0 materials can compel you to pass
on the hi2e to your customers and ma2e your products unattractive in the mar2et. (y
)uying commodity futures3 you can fix the price of your ra0 material.
• "ns)re contin)o)s s)**-y J "ny shortfall in the supply of ra0 materials can stall
your production and ma2e you default on your sale o)ligations. .ou can avoid this ris2
)y )uying a commodity futures contract )y 0hich you are assured of supply of a fixed
/uantity of materials at a pre8decided price at the appointed time.
1he effective mechanism of settlement and delivery procedures adopted and
employed )y MC@ has once again undergone rigorous tests and have come out extremely
successful. 1his is signified 0ith the surging trading volume in )ullion contracts and high
open interest entering the settlement period resulting in healthy /uantities getting
physically delivered. 1his 0hole process underscores the efficacy 4 transparency of the
complete trading3 settlement and delivery process employed )y MC@.
1he complete delivery procedure right from getting the possession of the precious
metal from the sellers3 necessary /uality certifications3 consignment movement3 handing
over the precious metal to the )uyers3 etc 0as completed in flat ! days period. 1he
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 4%
Awareness of commodity market with reference Derivative investors
complete process has )een 0or2ed out at a very optimal cost and on an average each
participant involved in the delivery process had incurred only Rs. 3!6G8 per transaction.
Fhen the MC@ =old Contract entered into settlement period the Bpen nterest in
=old 0as #%6 ,gs after reducing from over 4666 ,gs fe0 days ago. 1his open interest
resulted in 1!2 ,gs of gold getting delivered and the )alance gold3 0hich entered into the
delivery period3 0as s/uared up. 1he total volume in MC@ =old 9ecem)er futures
contract 0as 236233 ,gs valuing around Rs. 14!%% crores.
Bn the same pattern Bpen nterest in Silver 0as 1#3%46 ,gs after reducing from over
13#63666 ,gs fe0 days )ac2. Eo0ever3 the actual delivery in Silver 0as 123#'& 2gs and
the )alance Silver that entered into the delivery period 0as s/uared up. 1he total volume
in MC@ Silver 9ecem)er futures contract 0as 22'!6 M. 1ons valuing around Rs. 2!624
crores.
n all the previous settlements also MC@ platform has al0ays seen appropriate
percentage of open interest position resulting in physical delivery. =old has seen a
cumulative physical delivery of 24! ,gs and Silver 21'6 ,gs across all the settlements
completed )efore the current settlement.
=old 4 silver futures contracts are getting recogni5ed as the most relia)le 4
dependa)le investment options that are today availa)le to traders and investors 0ho are
loo2ing to 0iden their portfolio )eyond e/uity instruments. 1his is )ecause of the
credi)ility that these commodities have en*oyed glo)ally and the technical 4 fundamental
analysis that has gone in arriving at various trading strategies.
ndia is the largest importer for =old in the 0orld3 around &66 tons per year3 reali5ing this
potential of =old3 =overnment of ndia has set up a committee to examine the regulatory
structure of the gold industry to ma2e ndia a gold trading hu). 1his committee is
constituted under the Chairmanship of Secretary3 9epartment of Commerce3 and Ministry
of Commerce 4 ndustry. MC@ is a mem)er of the committee and loo2s for0ard to
contri)uting suggestions on the role that $utures mar2et can play in ma2ing ndia a glo)al
gold trading hu).
1he first meeting for the =old Committee is )eing held under the Chairmanship
of Commerce Secretary on 16th 9ecem)er 2664.
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Awareness of commodity market with reference Derivative investors
Pro'-ems 0acin4 'y ommodity 0)t)re market
1. 1he spotGphysical mar2ets are fragmented. 1his may )e )ecause of the
restrictions on the free movement of commodities in the physical form under the
Essential Commodities "ct3 "7MC "ct3 Cicensing restrictions3 etc. Eence3 the
creation of an integrated and vi)rant domestic mar2et for physical trading in
commodities 0ith ade/uate infrastructure and transparent trading system is a pre8
re/uisite for )road )ased commodity derivatives mar2ets.
2. Cac2 of mechanism for standardi5ation of 0arehousing receipts. 1he a)sence of
the regulatory authority for accreditation of 0arehouses and for setting standards for
scientific grading3 pac2aging3 storage and preservation. "s a result3 though (an2s
grant credit against 0arehouse receipts no03 they are largely restricted to the ones
issued )y the Central Farehousing Corporation and those promoted )y the State
=overnments. Eo0ever3 this pro)lem is )eing sorted out )y the $ood Ministry3
0hich is in the process of drafting a Farehouse 9evelopment and Regulation "ct to
promote 0arehouse receipts8)ased lending and commodity derivative transactions.
3. 9emateriali5ed settlement system for commodities 0hich has the standardi5ation
of 0arehouse receipts as a pre8re/uisite. " system of physical delivery of
commodities )ac2ed )y 0arehouse receipt system can help eliminate the /uality ris2
and price ris2. t 0ill facilitate seamless nation 0ide spot mar2et for commodities.
4. Creation of depository system for electronically facilitating transfer and delivery
of commodities in demateriali5ed form.
!. ?eed to ma2e 0arehouse receipts transfera)le. Fe understand that a )ill to
amend the $or0ard Contracts ;Regulation< "ct3 1'!2 is slated to )e ta2en up during
the current )udget session of the 7arliament3 0hich proposes to permit the
transfera)ility of 0arehouse receipts )y scrapping Section 1&;2< of the "ct. 1his 0ill
BABASAB PATIL MBA FINANCE PROJECT REPORT Page 4'
Awareness of commodity market with reference Derivative investors
also easy access to finance from )an2s and financial institutions against produce
stored in 0arehouses.
#. Most of the commodity exchanges function as speciali5ed product )ourses. 1his
is even true of the national multi commodity exchanges )ecause of lac2 of volumes
in many commodities in spite the trading )eing allo0ed in many formally. Fhile
?C9E@ technically trades in 3! commodities3 a)out '6 per cent of its volume comes
from *ust & products. n case of MC@3 gold and silver account for a ma*or share in
the trading volume3 though it trades in 41 commodities. 7epper3 cardamom3 ru))er3
coffee and *ute products are the five products that are prominently traded in ?MCE
even though a)out !' commodities are traded here. 1his may )e attri)uted to the fact
that there are different players for different commodities.
%. 1here are no uniform contract specifications for the same commodity traded on
various exchanges. "s a result3 there is no proper mechanism to assess price of the
same commodity across various exchanges3 as price depends on the contract
specification.
&. Bnline trading at the national level is mandatory only in respect of ?ational level
multi commodity exchanges3 0hile such a compulsion is not applica)le to the
regional ones. Eence transparency suffers.
'. 9emutuali5ation is yet to happen completely. Many exchanges are associations of
mem)ers 0ho retain trading rights and o0nership. 1his interest of the promoters as
traders has serious implications for the integrity of these exchanges.
16. Residents in ndia3 engaged in import and export trade3 may hedge the price ris2
of commodities in the international commodity exchangesGmar2ets. "pplications for
commodity hedging are to )e for0arded to R(. " one8time approval 0ill )e given
)y R( along 0ith the guidelines for underta2ing this activity. 1he Reserve (an2 of
ndia3 0hich is considering a proposal to grant )lan2et approval to ndian companies
BABASAB PATIL MBA FINANCE PROJECT REPORT Page !6
Awareness of commodity market with reference Derivative investors
that have an exposure to commodities to freely hedge in the international exchanges3
must also ensure that they use the products availa)le in the ndian commodity
derivatives mar2ets.
11. Bptions trading in commodities are prohi)ited as of no0 0hich puts constraints
on the mar2ets. ntroduction of options trading in commodities is a necessary
condition for institutional investors to trade in commodity derivatives trading3 as this
0ould ma2e it easier for the institutional investors to convert the commodity
derivatives products as financial products.
f the institutional investors3 li2e )an2s and mutual funds3 0hose presence as of no0 is
only in capital mar2ets need to start operating in commodity derivatives mar2ets as 0ell
then these additional issues are also re/uired to )e addressed.
12. Convergence of the regulators of capital mar2ets and commodity mar2ets is a pre8
re/uisite for free flo0 of funds )et0een mar2ets.
13. 1he players in capital mar2ets must ac/uire the re/uired expertise for trading in
commodity mar2ets and vice versa to have an integrated vie0 of all mar2ets.
1hy are ommodity Derivatives Re9)ired8
ndia is among the top8! producers of most of the commodities3 in addition to
)eing a ma*or consumer of )ullion and energy products. "griculture contri)utes a)out 22D to
the =97 of the ndian economy. t employees around !%D of the la)or force on a total of 1#3
million hectares of land. "griculture sector is an important factor in achieving a =97 gro0th
of &816D. "ll this indicates that ndia can )e promoted as a ma*or center for trading of
commodity derivatives.
t is unfortunate that the policies of $MC during the most of 1'!6s to 1'&6s
suppressed the very mar2ets it 0as supposed to encourage and nurture to gro0 0ith times. t
BABASAB PATIL MBA FINANCE PROJECT REPORT Page !1
Awareness of commodity market with reference Derivative investors
0as a mista2e other emerging economies of the 0orld 0ould 0ant to avoid. Eo0ever3 it is
not in ndia alone that derivatives 0ere suspected of creating too much speculation that
0ould )e to the detriment of the healthy gro0th of the mar2ets and the farmers. Such
suspicions might normally arise due to a misunderstanding of the characteristics and role of
derivative product.
t is important to understand 0hy commodity derivatives are re/uired and the role they
can play in ris2 management. t is common 2no0ledge that prices of commodities3 metals3
shares and currencies fluctuate over time. 1he possi)ility of adverse price changes in future
creates ris2 for )usinesses. 9erivatives are used to reduce or eliminate price ris2 arising from
unforeseen price changes. " derivative is a financial contract 0hose price depends on3 or is
derived from3 the price of another asset.
10o important derivatives are futures and options.
(i) Commodity Futures Contracts/
" futures contract is an agreement for )uying or selling a Commodity for a
predetermined delivery price at a specific future time. $utures are standardi5e contracts that
are traded on organi5ed futures exchanges that ensure performance of the contracts and thus
remove the default ris2. 1he commodity futures have existed since the Chicago (oard of
BABASAB PATIL MBA FINANCE PROJECT REPORT Page !2
Awareness of commodity market with reference Derivative investors
1rade ;C(B13 000.c)ot.com< 0as esta)lished in 1&4& to )ring farmers and merchants
together. 1he ma*or function of futures mar2ets is to transfer price ris2 from hedgers to
speculators. $or example3 suppose a farmer is expecting his crop of 0heat to )e ready in t0o
months time3 )ut is 0orried that the price of 0heat may decline in this period. n order to
minimi5e his ris23 he can enter into a futures contract to sell his crop in t0o monthsI time at a
price determined no0. 1his 0ay he is a)le to hedge his ris2 arising from a possi)le adverse
change in the price of his commodity.
(ii) Commodity Options contracts:
Ci2e futures3 options are also financial instruments used for hedging and
speculation. 1he commodity option holder has the right3 )ut not the o)ligation3 to )uy ;or
sell< a specific /uantity of a commodity at a specified price on or )efore a specified date.
Bption contracts involve t0o parties J the seller of the option 0rites the option in favour of
the )uyer ;holder< 0ho pays a certain premium to the seller as a price for the option. 1here
are t0o types of commodity options> a McallI option gives the holder a right to )uy a
commodity at an agreed price3 0hile a MputI option gives the holder a right to sell a
commodity at an agreed price on or )efore a specified date ;called expiry date $rom the a)ove diagram 0e can say that out of 166 traders only 3'D
have invested in commodity mar2et #1D have not invested in commodity mar2et so even
though the most of the traders are a0are a)out Commodity $uture mar2et they are not
trading in $uture mar2et traders feel there is a high ris2 involved in the future mar2et.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %2
Awareness of commodity market with reference Derivative investors
how do you came to know about commodity market
(1 (1.0 (1.0 (1.0
12 12.0 12.0 73.0
9 9.0 9.0 '2.0
1' 1'.0 1'.0 100.0
100 100.0 100.0
not atte$pted
frnds1colleauges
bill boards1advt1brochure
agents
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
ho* do !ou ca$e to ,no* about co$$odit! $ar,et
1'.0%
9.0%
12.0%
(1.0%
agents
bill boards1advt1bro
frnds1colleauges
not atte$pted
Inter*retation> most of the investors came to 2no0 a)out the commodity )y agents the
respondents 0ho have invested in commodity mar2et from them 1&D of the people came
to 2no0 )y agents 3'D from the )ill )oards GadvertisementG)rochure 412D people came
to 2no0 )y there friends and colleagues. Eere not attempted indicates the people 0ho
have not invested in commodity mar2et have not attempted this /uestion.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %3
Awareness of commodity market with reference Derivative investors
commodity you prefer for trading
(4 (4.0 (4.0 (4.0
10 10.0 10.0 74.0
5 5.0 5.0 79.0
1( 1(.0 1(.0 95.0
5 5.0 5.0 100.0
100 100.0 100.0
not atte$pted
&gro products
+ase $etals
"recious $etals
2nerg! products
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %4
Awareness of commodity market with reference Derivative investors
co$$odit! !ou prefer for trading
5.0%
1(.0%
5.0%
10.0%
(4.0%
2nerg! products
"recious $etals
+ase $etals
&gro products
not atte$pted
Inter*retation> among the persons 0ho have invested in commodity in them 16D prefer
to trade in agro products3 !D in )ase metals3 1#D in precious metals 4 ! D in energy
products .here not attempted indicates the people 0ho have not invested in commodity
mar2et have not attempted this /uestion.
Factors considered while trading in commodity market
(5 (5.0 (5.0 (5.0
3 3.0 3.0 ('.0
' '.0 '.0 7(.0
13 13.0 13.0 '9.0
11 11.0 11.0 100.0
100 100.0 100.0
not atte$pted
price
season
ris,
return
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %!
Awareness of commodity market with reference Derivative investors
Factors considered *hile trading in co$$odit! $ar,et
11.0%
13.0%
'.0%
3.0%
(5.0%
return
ris,
season
price
not atte$pted
Inter*retation/ Most of the investors consider 11D of return313D of ris233D price4 &D
of season. Fhile investing in commodities mainly they considered returns 4 ris2 0hile
investing in commodity mar2et they mainly consider returns 4 ris2. here not attempted
indicates the people 0ho have not invested in commodity mar2et have not attempted this
/uestion.
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Awareness of commodity market with reference Derivative investors
commodity future mkt provides benefit
(2 (2.0 (2.0 (2.0
9 9.0 9.0 71.0
10 10.0 10.0 '1.0
1' 1'.0 1'.0 99.0
1 1.0 1.0 100.0
100 100.0 100.0
not atte$ted
strongl! agree
agree
neutral
disagree
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
co$$odit! future $,t provides benefit
1.0%
1'.0%
10.0%
9.0%
(2.0%
disagree
neutral
agree
strongl! agree
not atte$ted
Inter*retation/ most of the investors say it is in neutral position 4 some 0ho are
)enefited lot they 0ill go for factors li2e agree 4 strongly agree 4 percentage of
disagree is very less among invested people
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %%
Awareness of commodity market with reference Derivative investors
Reasons why they have not invested in commodity mkt
39 39.0 39.0 39.0
5 5.0 5.0 44.0
10 10.0 10.0 54.0
7 7.0 7.0 (1.0
33 33.0 33.0 94.0
( (.0 (.0 100.0
100 100.0 100.0
those *ho hv invested
3ot intersted
.nfo non availabilit!
high invest$ent
co$ple4 understanding
high ris,
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
-easons *h! the! have not invested in co$$odit! $,t
(.0%
33.0%
7.0%
10.0%
5.0%
39.0%
high ris,
co$ple4 understandin
high invest$ent
.nf o non availabilit
3ot intersted
those *ho hv investe
Inter*retation/ 1he a)ove pie chart sho0s that most of the traders are not interested to
invest in Commodity $uture Mar2et due to complex understanding involved in it around
33D of the traders are given this reason and !D of them are not interested in investing in
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %&
Awareness of commodity market with reference Derivative investors
this mar2et3 # 4 %D thin2 that it involves high ris2 and high investment So there is great
need to create a0areness a)out Commodity $uture mar2et )y telling its advantages.
planning for trading in commodity mkt in future
(7 (7.0 (7.0 (7.0
33 33.0 33.0 100.0
100 100.0 100.0
!es
no
Total
Valid
Freuenc! "ercent Valid "ercent
#u$ulative
"ercent
planning for trading in co$$odit! $,t in future
33.0%
(7.0%
no
!es
Inter*retation> $rom the a)ove graph 0e conclude that most of the traders are interested
to invest in Commodity $uture Mar2et if proper a0areness is created among them and
BABASAB PATIL MBA FINANCE PROJECT REPORT Page %'
Awareness of commodity market with reference Derivative investors
other 33D are not interested to invest .1hese #%D of traders are the potential customers
for the company.
0indin4s
• More than !6D of the 1raders in are a0are a)out the commodity future
Mar2et
• Eardly 36D traders are invested in the commodity future mar2et
• Most of the investors are not ready to invest in commodity future mar2et they feel it
involve high ris2.
• Returns and the Ris2 of the commodity are the most critical factors3 0hich
1raders 0ill consider 0hile investing in any commodity
• Most of the investors are ready to invest in commodity future mar2et if proper
information is provided
• "s commodity future mar2et is ne0 and emerging 3many investors and farmers are
not fully a0are of this mar2et .as the mar2et helps to trade transparently 0ithout
middlemen and agents
• Fhile finding the reasons 0hy most of the people are not trading in commodity
mar2et found that many respondents are not interested at all in this trade this is
)ecause of una0areness 4 mythical perception a)out commodity mar2et.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &6
Awareness of commodity market with reference Derivative investors
• Most of the respondents are 0ere from government service 4 )usiness men
S)44estion
• 1here is need to create a0areness a)out commodity $uture Mar2et. "0areness
program has to )e conducted )y ,arvy consultants3 )ecause since this 0as ne0 to the
mar2et .so it can )e done through )y giving advertisements in local channels3
?e0spapers3 )y sending E8mail to present customers etc
• $rom survey it is found that most of the potential customers are concerned a)out the
(ro2erage charges so ,arvy can loo2 upon this. f it can charge moderate )ro2erage
it 0ill help to attract more and more customers.
• More agents and mar2eting executives should )e appointed to educate the customers
)ecause the customers having many myths in there mind
• "nd also create the a0areness of electronic commodity trading
• $irm should approach people 0ho are already into the )usiness of commodities
.special campaigns G investors meets should )e conducted for these people since they
are a0are of rate fluctuation 3mar2et trends etc . 1hey have got mar2et idea that
)enefits them in price prediction. 1hey 0ill )e in high spirits 0hen price ris2 of them
0ill )e managed.
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Awareness of commodity market with reference Derivative investors
ONL!SION
Commodity futures mar2ets are ne0 and emerging mar2et. 1he a0areness of the mar2et
is very less among the investors 0ho can use this trade to sell there products 0ithout the
middlemen or agents it also help the actual )uyers too. Eere trader also can transfer his
ris2 to some other 0ho can handle it or can appetite the ris2 through hedging techni/ues
Compared to capital mar2et commodity mar2et is less ris2y in
volatility context here the prices do not change 0ithin a fraction of second .significantly3
minimum margin ready physical possession3 no manipulation 4 fraud3 maximum
profita)ility is availa)le over here since the commodity mar2et helps all such as farmers3
industries and individuals investors it is gro0ing at a faster rate in glo)al outloo2.
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &2
Awareness of commodity market with reference Derivative investors
BIBLOGRAPHY
News Papers;
? Business Line
? Economic times
? Times of India
1e' site
? 000.moneycontrol.com
? 000.google.com
? [email protected]
BABASAB PATIL MBA FINANCE PROJECT REPORT Page &3
Awareness of commodity market with reference Derivative investors
? [email protected]
Te7t 'ooks
$utures 4 Bptions second addition )y -ohra 4 (agri
5!"STIONNAIR"
NA%" / ::::::::::::::::::::::::::::::::::
A," / ::::::::::::::::::::::::::::::::::
ADDR"SS / ::::::::::::::::::::::::::::::::::
ONTAT NO/ ::::::::::::::::::::::::::::::::::
1< Fhich of the follo0ing 0ill )est descri)e your occupation
;?ote> please tic2 )elo0 the option you 0ant to choose<
3)siness Profession ,ovt.services Private service Others s*ecify
2< Fhat is your annual incomeT
3e-ow ;