Summer Training Report

SUMMER TRAINING REPORT ON

“A STUDY ON INVESTORS PREFERENCE OF COMMODITY MARKETS”

Undertaken at

“RELIAGRE COMMODITIES PVT LTD”

Submitted in partial fulfillment of the requirements

for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

to

Guru Gobind Singh Indraprastha University, Delhi

Under the Guidance of: Submitted by:

Prof. Rajesh Bajaj Varun Kumar Bharti

MBA-III Semester

Enrollment No.:-00317003911

Session 2012 – 13

To Whom It May Concern

I Varun Kumar Bharti, Enrolment No.00317003911 from MBA-III Sem of the Tecnia Institute of Advanced Studies,

Delhi hereby declare that the Summer Training Report (MS-201) entitled “A STUDY ON INVESTORS PREFERENCE OF

COMMODITY MARKETS at Religare Commodities Pvt. Ltd” is an original work and the same has not been submitted

to any other Institute for the award of any other degree. A presentation of the Summer Training Report was made on

_______________________ and the suggestions as approved by the faculty were duly incorporated.

Date: Signature of the Student

Certified that the Summer Training Report submitted in partial fulfillment of Master of Business Administration (MBA)

to be awarded by G.G.S.I.P. University, Delhi by VARUN KUMAR BHARTI, Enrolment No. 00317003911 has been

completed under my guidance and is Satisfactory.

Date: Signature of the Guide

Name of the Guide:

Designation:

ACKNOWLEDGEMENT

It gives me immense pleasure and sense of achievement in preparing and presenting this project report as per

requirement for completion of summer internship project.

The completion of summer training report entitled ‘A STUDY ON INVESTORS PREFERENCE OF COMMODITY MARKETS’ give me an opportunity to convey my gratitude’s to all those who have helped me to complete this research work successfully and well within time.

I am sincerely thankful to my guide Prof.Rajesh Bajaj for their ideas and suggestion during my project work

which inspired me to put in best my efforts in the research work. Their encouragement, time and effort are

greatly appreciated.

I would be failing in my duties if I do not express my overwhelming sense of gratitude to Mr. Kapil Gupta (Sr. Manager- Risk Management), Mr. Sujeet Pandey (Sr. Team Leader) and Mr. Aswani Kumar(Research Analyst) and for giving me an opportunity to do my project work at Religare Commodities.

I would like to thank all those employees of Religare Commodities who helped in providing valuable feedback

which helped in data analysis and supported my research.

In the last I would like to thank all individuals known or unknown who have helped me directly or indirectly during the research fellowship period.

VARUN KUMAR BHARTI

OO317003911

EXECUTIVE SUMMARY

I have carried the project titled “A STUDY ON INVESTORS PREFERENCE OF COMMODITY MARKETS” during

my summer internship at Religare Commodities Pvt. Ltd

I have carried my research work investors preference of commodity market like when the market is high or low,

what is the time to invest, who are the best brokers in the market through which we can invest.

I have analyzed that the movement in commodity market is very uncertain; it can go up and down without any

certain prediction. The data has been taken from various websites and thus it helped me in analyzing the

variation in the market.

CONTENTS

S No Topic Page No1 Certificate -2 Summer Training Appraisal3 Acknowledgement -4 Executive Summary -

Chapter I: IntroductionChapter II: Review of Literature -Chapter III: Research MethodologyChapter IV: Data Reduction, Presentation & AnalysisChapter V: Data Interpretation

4 Chapter VI: Summary & ConclusionsReferences/ Bibliography

7 Appendices- List of Tables- List of Figures

CHAPTER 1

INTRODUCTION

1.1. INTRODUCTION TO THE STUDY

The main idea behind the study conducted was to find out the investors preference of commodity market with

reference to Religare commodities Pvt. Ltd

This study should deal with the investor’s preference from commodity market. To identify the investor’s

preference means, it should find out the characteristics of investors who invest under the guidance of different

share brokers. It also should concentrate on whether they are satisfied with the services and earnings from the

commodity market to provide by the investment and also by the brokers service.

They will be expecting different types of commodities from their investment guide. Some of them may not be

satisfied with their service and the information they give. My aim is to find out the investors preference from

commodity market of the investors from their share brokers. How investor’s satisfaction from commodity

market satisfaction level can be improved by providing better services. Keeping all these things in mind the

primary and secondary objectives of the study are set.

A. MEANING OF INVESTOR :

An investor is any party that makes an investment. The term has taken on a specific meaning in finance to

describe the particular types of people and companies that regularly purchase equity or debt securities for

financial gain in exchange for funding an expanding company.

Less frequently, the term is applied to parties who purchase real estate, currency, commodity derivatives,

personal property, or other assets. The term implies that a party purchases and holds assets in hopes of

achieving capital gain or cash flow, not as a profession or for short-term income.

a) Types of investors :

Here is an overlapping, non-exclusive list of investor types:

i. Individual investors (including trusts on behalf of individuals, and umbrella companies formed for two or

more to pool investment funds).

ii. Collectors of art, antiques, and other things of value.

iii. Angel investors, either individually or in groups.

iv. Venture capital funds, which serve as investment collectives on behalf of individuals, companies, pension

http://en.wikipedia.org/wiki/Angel_investors

http://en.wikipedia.org/wiki/Art

http://en.wikipedia.org/wiki/Collecting

http://en.wikipedia.org/wiki/Trust_(property)

plans, insurance reserves, or other funds.

v. Investment banks.

vi. Businesses that make investments, either directly or via a captive fund

vii. Investment trusts, including real estate investment trusts

viii. Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded (these

funds typically pool money raised from their owner-subscribers to invest in securities)

ix. Sovereign wealth funds

B. Commodity Market is an organized traders' exchange in which standardized, graded products are bought

and sold. Worldwide, there are 48 major commodity exchanges that trade over 96 commodities, ranging from

wheat and cotton to silver and oil. Most trading is done in futures contracts, that is, agreements to deliver goods

at a set time in the future for a price established at the time of the agreement.

Trading of S&P 500 and other financial futures has broken down some of the barriers that once separated

stock, bond, and commodity markets and made it easier for investors to hedge their stock investments. Critics

charge that the futures trading at the commodity markets in Chicago have made stock prices more volatile.

The Chicago Board of Trade is the largest futures and options exchange in the United States, the largest in the

world is Eurex, an electronic European exchange.

a) Types of traders in a derivatives market :

i. Hedgers :

Hedgers are those who protect themselves from the risk associated with the price of an asset by using

derivatives. A person keeps a close watch upon the prices discovered in trading and when the comfortable

price is reflected according to his wants, he sells futures contracts. In this way he gets an assured fixed price of

his produce.

In general, hedgers use futures for protection against adverse future price movements in the underlying cash

commodity. Hedgers are often businesses, or individuals, who at one point or another deal in the underlying

cash commodity. Take an example: A Hedger pay more to the farmer or dealer of a produce if its prices go up.

For protection against higher prices of the produce, he hedges the risk exposure by buying enough future

contracts of the produce to cover the amount of produce he expects to buy. Since cash and futures prices do

tend to move in tandem, the futures position will profit if the price of the produce raise enough to offset cash

loss on the produce.

http://en.wikipedia.org/wiki/Sovereign_wealth_fund

http://en.wikipedia.org/wiki/Publicly_traded

http://en.wikipedia.org/wiki/Mutual_funds

http://en.wikipedia.org/wiki/Real_estate_investment_trust

http://en.wikipedia.org/wiki/Investment_trust

http://en.wikipedia.org/wiki/Businesses

http://en.wikipedia.org/wiki/Investment_banks

ii. Speculators:

Speculators are somewhat like a middle man. They are never interested in actual owing the commodity. They

will just buy from one end and sell it to the other in anticipation of future price movements. They actually bet

on the future movement in the price of an asset. They are the second major group of futures players. These

participants include independent floor traders and investors. They handle trades for their personal clients or

brokerage firms. Buying a futures contract in anticipation of price increases is known as ‘going long’. Selling a

futures contract in anticipation of a price decrease is known as ‘going short’. Speculative participation in

futures trading has increased with the availability of alternative methods of participation.

Speculators have certain advantages over other investments they are as follows:

If the trader’s judgment is good, he can make more money in the futures market faster because prices tend, on

average, to change more quickly than real estate or stock prices. Futures are highly leveraged investments. The

trader puts up a small fraction of the value of the underlying contract as margin, yet he can ride on the full

value of the contract as it moves up and down. The money he puts up is not a down payment on the underlying

contract, but a performance bond. The actual value of the contract is only exchanged on those rare occasions

when delivery takes place.

iii. Arbitrators:

According to dictionary definition, a person who has been officially chosen to make a decision between two

people or groups who do not agree is known as Arbitrator. In commodity market Arbitrators are the person

who takes the advantage of a discrepancy between prices in two different markets. If he finds future prices of a

commodity edging out with the cash price, he will take offsetting positions in both the markets to lock in a

profit. Moreover the commodity futures investor is not charged interest on the difference between margin and

the full contract value.

Leading commodity markets of world:

Some of the leading exchanges of the world are New York Mercantile Exchange (NYMEX), the London

Metal Exchange (LME) and the Chicago Board of Trade (CBOT).

Leading commodity markets of India:

The government has now allowed national commodity exchanges, similar to the BSE & NSE, to come up and

let them deal in commodity derivatives in an electronic trading environment. These exchanges are expected to

offer a nation-wide anonymous, order driven; screen based trading system for trading. The Forward Markets

Commission (FMC) will regulate these exchanges.

1.2 INTRODUCTION TO THE INDUSTRY PROFILE

1.2.1 Commodity markets are markets where raw or primary products are exchanged. These raw

commodities are traded on regulated commodities exchanges, in which they are bought and sold in

standardized contracts.

This article focuses on the history and current debates regarding global commodity markets. It covers physical

product (food, metals, and electricity) markets but not the ways that services, including those of governments,

nor investment, nor debt, can be seen as a commodity. Articles on reinsurance markets, stock markets, bond

markets and currency markets cover those concerns separately and in more depth. One focus of this article is

the relationship between simple commodity money and the more complex instruments offered in the

commodity markets.

1.2.2 History

The modern commodity markets have their roots in the trading of agricultural products. While wheat and corn,

cattle and pigs, were widely traded using standard instruments in the 19th century in the United States, other

basic foodstuffs such as soybeans were only added quite recently in most markets. For a commodity market to

be established there must be very broad consensus on the variations in the product that make it acceptable for

one purpose or another.

The economic impact of the development of commodity markets is hard to overestimate. Through the 19th

century "the exchanges became effective spokesmen for, and innovators of, improvements in transportation,

warehousing, and financing, which paved the way to expanded interstate and international trade.”

1.2.3 Early history of commodity markets

Historically, dating from ancient Sumerian use of sheep or goats, other peoples using pigs, rare seashells, or

other items as commodity money, people have sought ways to standardize and trade contracts in the delivery

of such items, to render trade itself more smooth and predictable.

Commodity money and commodity markets in a crude early form are believed to have originated

in Sumer where small baked clay tokens in the shape of sheep or goats were used in trade. Sealed in clay

vessels with a certain number of such tokens, with that number written on the outside, they represented a

promise to deliver that number. This made them a form of commodity money - more than an I.O.U. but less

than a guarantee by a nation-state or bank. However, they were also known to contain promises of time and

date of delivery - this made them like a modern futures contract. Regardless of the details, it was only possible

to verify the number of tokens inside by shaking the vessel or by breaking it, at which point the number or

terms written on the outside became subject to doubt. Eventually the tokens disappeared, but the contracts

remained on flat tablets. This represented the first system of commodity accounting.

Classical civilizations built complex global markets trading gold or silver for spices, cloth, wood and weapons,

most of which had standards of quality and timeliness. Considering the many hazards of climate, piracy, theft

and abuse of military fiat by rulers of kingdoms along the trade routes, it was a major focus of these

civilizations to keep markets open and trading in these scarce commodities. Reputation and clearing became

central concerns, and the states which could handle them most effectively became very powerful empires,

trusted by many peoples to manage and mediate trade and commerce.

1.2.4 Size of the market

The trading of commodities consists of direct physical trading and derivatives trading. Exchange traded

commodities have seen an upturn in the volume of trading since the start of the decade. This was largely a

result of the growing attraction of commodities as an asset class and a proliferation of investment options

which has made it easier to access this market.

The global volume of commodities contracts traded on exchanges increased by a fifth in 2010, and a half since

2008, to around 2.5 billion million contracts. During the three years up to the end of 2010, global physical

exports of commodities fell by 2%, while the outstanding value of OTC commodities derivatives declined by

two-thirds as investors reduced risk following a five-fold increase in value outstanding in the previous three

years. Trading on exchanges in China and India has gained in importance in recent years due to their

emergence as significant commodities consumers and producers. China accounted for more than 60% of

exchange-traded commodities in 2009, up on its 40% share in the previous year.

Commodity assets under management more than doubled between 2008 and 2010 to nearly $380bn. Inflows

into the sector totalled over $60bn in 2010, the second highest year on record, down from the record $72bn

allocated to commodities funds in the previous year. The bulk of funds went into precious metals and energy

products. The growth in prices of many commodities in 2010 contributed to the increase in the value of

commodities funds under management.

2. Commodity Trading

2.1. Spot trading

Spot trading is any transaction where delivery either takes place immediately, or with a minimum lag between

the trade and delivery due to technical constraints. Spot trading normally involves visual inspection of the

commodity or a sample of the commodity, and is carried out in markets such as wholesale markets.

Commodity markets, on the other hand, require the existence of agreed standards so that trades can be made

without visual inspection.

2.1.2 Forward contracts

A forward contract is an agreement between two parties to exchange at some fixed future date a given quantity

of a commodity for a price defined today. The fixed price today is known as the forward price.

2.1.3 Futures contracts

A futures contract has the same general features as a forward contract but is transacted through a futures

exchange.

Commodity and futures contracts are based on what’s termed forward contracts. Early on these forward

contracts — agreements to buy now, pay and deliver later — were used as a way of getting products from

producer to the consumer. These typically were only for food and agricultural products. Forward contracts

have evolved and have been standardized into what we know today as futures contracts. Although more

complex today, early forward contracts for example, were used for rice in seventeenth century Japan. Modern

forward, or futures agreements began in Chicago in the 1840s, with the appearance of the railroads. Chicago,

being centrally located, emerged as the hub between Midwestern farmers and producers and the east coast

consumer population centers.

In essence, a futures contract is a standardized forward contract in which the buyer and the seller accept the

terms in regards to product, grade, quantity and location and are only free to negotiate the price.

3 Commodity Exchanges

A brief description of commodity exchanges is those which trade in particular commodities, neglecting the

trade of securities, stock index futures and options etc.

In the middle of 19th century in the United States, businessmen began organizing market forums to make the

buying and selling of commodities easier. These central marketplaces provided a place for buyers and sellers

to meet, set quality and quantity standards, and establish rules of business.

Agricultural commodities were mostly traded but as long as there are buyers and sellers, any commodity can

be traded. In 1872, a group of Manhattan dairy merchants got together to bring chaotic condition in New York

market to a system in terms of storage, pricing, and transfer of agricultural products.

In 1933, during the Great Depression, the Commodity Exchange, Inc. was established in New York through

the merger of four small exchanges – the National Metal Exchange, the Rubber Exchange of New York, the

National Raw Silk Exchange, and the New York Hide Exchange.

The major commodity markets are in the United Kingdom and in the USA. In India there are 25 recognized

future exchanges, of which there are three national level multi-commodity exchanges. After a gap of almost

three decades, Government of India has allowed forward transactions in commodities through Online

Commodity Exchanges, a modification of traditional business known as Adhat and Vayda Vyapar to facilitate

better risk coverage and delivery of commodities. The three exchanges are:

a) National Commodity & Derivatives Exchange Limited (NCDEX)

b) Multi Commodity Exchange of India Limited (MCX)

c) National Multi-Commodity Exchange of India Limited (NMCEIL)

All the exchanges have been set up under overall control of Forward Market Commission (FMC) of

Government of India.

A. National Commodity & Derivatives Exchange Limited (NCDEX)

National Commodity & Derivatives Exchange Limited (NCDEX) located in Mumbai is a public limited

company incorporated on April 23, 2003 under the Companies Act, 1956 and had commenced its operations

on December 15, 2003.This is the only commodity exchange in the country promoted by national level

institutions. It is promoted by ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank

for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). It

is a professionally managed online multi commodity exchange. NCDEX is regulated by Forward Market

Commission and is subjected to various laws of the land like the Companies Act, Stamp Act, Contracts Act,

Forward Commission (Regulation) Act and various other legislations.

B. Multi Commodity Exchange of India Limited (MCX)

Headquartered in Mumbai Multi Commodity Exchange of India Limited (MCX), is an independent and de-

mutualised exchange with a permanent recognition from Government of India. Key shareholders of MCX are

Financial Technologies (India) Ltd., State Bank of India, Union Bank of India, Corporation Bank, Bank of

India and Canara Bank. MCX facilitates online trading, clearing and settlement operations for commodity

futures markets across the country.

MCX started offering trade in November 2003 and has built strategic alliances with Bombay Bullion

Association, Bombay Metal Exchange, Solvent Extractors’ Association of India, Pulses Importers Association

and Shetkari Sanghatana.

C. National Multi-Commodity Exchange of India Limited (NMCEIL)

National Multi Commodity Exchange of India Limited (NMCEIL) is the first de-mutualized, Electronic Multi-

Commodity Exchange in India. On 25th July, 2001, it was granted approval by the Government to organize

trading in the edible oil complex. It has operationalised from November 26, 2002. It is being supported by

Central Warehousing Corporation Ltd., Gujarat State Agricultural Marketing Board and Neptune Overseas

Limited. It got its recognition in October 2002.

Commodity exchange in India plays an important role where the prices of any commodity are not fixed, in an

organized way. Earlier only the buyer of produce and its seller in the market judged upon the prices. Others

never had a say. Today, commodity exchanges are purely speculative in nature. Before discovering the price,

they reach to the producers, end-users, and even the retail investors, at a grassroots level. It brings a price

transparency and risk management in the vital market. A big difference between a typical auction, where a

single auctioneer announces the bids and the Exchange is that people are not only competing to buy but also to

sell. By Exchange rules and by law, no one can bid under a higher bid, and no one can offer to sell higher than

someone else’s lower offer. That keeps the market as efficient as possible, and keeps the traders on their toes

to make sure no one gets the purchase or sale before they do.

1.2 Objectives of Study is -

To study about the investors preferences towards commodity market in Reliagre commodities Pvt. Ltd.

To find out very high preference of commodity market

To analyze the various factors influencing investor’s preference on commodity market.

To find out the investors awareness regarding commodity market

To study about the investors acceptance level of rumors in commodity market

1.3 Scope of Study-

It assesses the preference of choosing the market by the respondents.

The study helps us to know about the Investor’s preferences towards commodity market.

It helped to bring out various investment opportunities and preference in commodity market.

The specific reason to why people preference commodity market one mode of

investment and earning high return

1.4 Company Profile- It is diversified Pvt. Ltd Company which provides financial services.

1.4.1 Address-

Registered Office

A-3, 4 , 5

Plot No - 11,

Sec - 125, GYS Global,

Uttar Pradesh, Noida -201301

STD Code: 120 Phone no. 3391000 6796000 Website:-www.religarecommodities.com

Subsidiaries:-

INDIAN BUSINESSES

a) Religare Finevest Ltd.

b) Reliagre Securities Ltd.

c) Religare Asset Management Co. Ltd.

d) Reliagre Health Insurance Co. Ltd.

INDIA JOINT VENTURES

a) AEGON Religare Life Insurance Co. Ltd.

b) Religare Macquarie Wealth Management Ltd.

INTERNATIONAL BUSINESSES

a) RELIAGRE Global Asset Management Inc.

b) Religare Capital Markets Ltd.

1.4.2 Nature Of the organization :-

Religare Commodities Limited (RCL) is a wholly owned subsidiary of RSL. It was set up to spearhead Exchange based Commodity Trading. As a member of MCX, NCDEX, NMCE, ICEX and ACE, in addition to both the Spot Exchanges (NSEL & NCDEX-SPOT), RCL is a trade facilitator providing the platform to trade in commodities.

Both RSL and RCL operate under the brand name of Religare Broking. RSL was conferred the "Best Broking House with a Global Presence" award by Dun & Bradstreet for two consecutive years in 2009 and 2010. RCL won the "Best Commodity Broker of the Year" at Bloomberg Financial Leadership Awards, 2011.

1.4.3 Company’s Vision -

"To be the leading emerging markets financial services group driven by innovation, delivering superior value for all stakeholders globally"

Company’s Mission:-

Religare endeavors to provide the best-in-class products and services to its customers through a distribution

channel that is seamless, motivated and supported.

1.4.4 Products and Services Offered:-

A. Trade in Commodity Futures

Why trade in Commodities?

a) Big market - diverse opportunities: Because the listed commodities include Bullion, Metals, Energy and Agri products, trading in commodities provides a lucrative market opportunity for investors, arbitragers, hedgers, traders, manufacturers, exporters and importers.

b) Huge potential: Commodity Exchanges witness a sizeable daily turnover, unlocking a huge potential for the participants to earn profits.

c) Exploitable fundamentals: Commodity trading operates on the simple principle that “Price is a function of Demand and Supply”. This makes things really easy to understand and exploit.

B. Commodity Corporate Desk

Religare Commodity Corporate Desk educates the producers and consumers about the benefits of hedging and hedging opportunities available. The desk provides guidance to the Corporate / Firms on the entire life cycle of their hedging strategies, including designing, implementing, and monitoring.

Uninformed hedging decisions, combined with sustained volatility in the commodities market, can be disastrous for companies of all sizes. The Religare Commodity Corporate desk helps smarter decision making with a higher risk-adjusted return on capital.

C. Spot Exchange

Trading on Spot Exchange platform is the trading of an actual physical commodity at the current market price. Current delivery price of a commodity traded in the spot market, comply with the price in which goods are sold for cash and delivered immediately through the spot exchange platform. This platform provides customized services relating to storage, procurement and disposal of commodities through online trading system.

Indian Spot Exchanges

a) National Spot Exchange Ltd.( NSEL)b) NCDEX Spot Exchange (NSPOT)

D. Currency Futures

Benefits of Currency Futures

a) High Liquidityb) Extended trading hours - 9 am to 5 pmc) Opportunities to reap benefits owing to a highly dynamic marketd) Small lot size of only US $1000 with low exchange specified margins

Currency Futures is best suited for -

a) SMEs / Individuals involved in Imports/Exportsb) Corporate/ Institutions involved in Imports/Exports and anybody else who has foreign currency

exposure

1.4.5 Size of the Organization -

a) More than 3000 employees are working in Religare commoditiesb) 10000 plus employees across multiple geographies in rest of the subsidiaries of religarE

1.4.6 Organization Structure of Company :-

1.4.7 Market Share and Position.

SHARE HOLDING PATTERN

Share Holding Pattern as on 30-Jun-2012

Promoters 71.77%

Institutional Investors 2.63%

Other Investors 9.77%

General Public 15.83%Promoters

Institutional Investors

Other Investors

General Public

As on : 30-Jun-2012

Face Value 10

No. Of Shares % Holding

PROMOTER HOLDING

Foreign Promoters 4,400,050 2.95

Indian Promoters 102,797,124 68.82

Sub Total 107,197,174 71.77

NON PROMOTER HOLDING

Institutional Investors

Mutual Funds and UTI 0 0.00

Banks Fin. Inst. and Insurance 1,608,756 1.08

FIIs 2,324,659 1.56

Sub Total 3,933,415 2.63

Other Investors

Private Corporate Bodies 2,585,277 1.73

NRIs/OCBs/Foreign Others 10,151,127 6.80

Directors 1,619,255 1.08

Others 231,007 0.15

Sub Total 14,586,666 9.77

General Public 23,651,298 15.83

GRAND TOTAL 149,368,553 100.00

Religare commodities has a strong presence across India

Religare enterprise ltd. Is a Ranbaxy promoter group company

a) 6 regional offices

b) 25 zonal offices

c) Presence through more than 900 locations-pan India

d) Present across more than 320 cities & town

e) Total group employees 10,000 plus

f) Research data centre has ISO/IEC 27001:2005 certification

Chapter II

REVIEW OF LITERATURE

3.1 According to Sahadevan, the Sagging Agricultural Commodity Exchanges - Growth Constraints and

Revival Policy Options: “Commodity derivatives have a crucial role to play in managing price risk especially in

agriculture dominated economies. However, they have been utilized in a very limited scale in India. As long as

prices of many commodities are restrained to certain extent by Government intervention in production, supply and

distribution, forwards and futures markets for hedging rice risk in those commodities have only limited practical

relevance. A review of the nature of institutional and policy level constraints facing this segment calls for more

focused and pragmatic approach from government, the regulator and the exchanges for making the agricultural

futures markets a vibrant segment for risk management”.

3.2 According to Peter Gibbon Danish Institute for International Studies, Copenhagen. The commodity

question: new thinking on old problems - “This paper reviews more and less mainstream policy options in

relation to the „commodity question‟ in the light both of its classical definition and of the emerging concern about

oligopoly. It begins by updating the evidence concerning commodity price decline and volatility, and examining the

implications of these phenomena for macro-economic performance and livelihoods in producing countries”.

3.3 According to Stephen Craig,"The Self-Regulation of Commodity Exchanges: The Case of Market

Manipulation."-“The paper deals with Price dissemination that every Mandy becomes a monopoly to the local

producers, especially once they come to the market. Farmers typically face a short period between the time that they

harvest and the time that they can sell the crop”.

3.4 According to Katherine Dusak, Futures Trading and Investor Returns: An Investigation of Commodity

Market Risk Premiums. “The long-standing controversy over whether speculators in a futures market earn a risk

premium is analyzed within the context of the capital asset pricing model recently developed by harpe, Lintner, and

others. Under that approach the risk premium required on a futures contract should depend not on the variability of

prices but on the extent to which the variations in prices are systematically related to variations in the return on

total wealth. The systematic risk was estimated for a sample of wheat, corn, and soybean futures contracts over the

period 1952 to 1967 and found to be close to zero in all three cases. Average realized holding period returns on the

contracts over the same period were close to zero”.

3.5 According to Susan Thomas, Agricultural commodity markets in India-Policy issues for growth:

“Strengthening institutions in spot and derivative markets for commodities is a necessary ingredient of the

liberalization process in agriculture, and can impact upon the lives of millions. n this paper, we describe the

existing market design prevalent on both the spot and the futures markets. We show some evidence on the role

played by the nascent futures markets in price discovery. We document the problems of both the spot and the

futures markets. We offer three policy proposals: using reference rates for strengthening transparency, exploring a

greater role for cash settlement, and treating warehouse receipts as securities”.

3.6 According to N.Sathish Kumar, Asst. Professor & Head, Department of Business Management. Vivekananda

PG College, Karimnagar “After almost two years that commodity trading is finding favor with Indian investors and is

been seen as a separate asset class with good growth opportunities. For diversification of portfolio beyond shares, fixed

deposits and mutual funds, commodity trading offers a good option for long-term investors and arbitrageurs and

speculators. And, now, with daily global volumes in commodity trading touching three times that of equities, trading in

commodities cannot be ignored by Indian investors.

Online commodity exchanges need to revamp certain laws governing futures in commodities to make the markets more

attractive. The national multi-commodity exchanges have unitedly proposed to the government that in view of the

growth of the commodities market, foreign institutional investors, too, should be given the go-ahead to invest in

commodity futures in India. Their entry will deepen and broad base the commodity futures market. As a matter of fact,

derivative instruments, such as futures, can help India become a global trading hub for select commodities.

Commodity trading in India is poised for a big take-off in India on the back of factors like global economic recovery and

increasing demand from China for commodities. Considering the huge volatility witnessed in the equity markets recently

with the Sensex touching 6900 level commodities could add the required zing to investors' portfolio. Therefore, it won't

be long before the market sees the emergence of a completely redefined set of retail investors.

3.7 According to Chua, Jess H., Gordon Sick, and Richard S. Woodward (1990). "Diversifying with Gold Stocks"

“The authors extend Jaffe’s (1989) study by examining the relative investment benefits of investing in gold equities

versus gold bullion during the period September 1971 through December 1988. By splitting their sample period into two

sub periods, the authors show that the diversification benefits of gold bullion are much more consistent than the

diversification benefits of gold equities. In particular, they find that the beta of gold equities more than doubled between

the 1970s and 1980s, whereas the beta of gold bullion remained largely unchanged at approximately zero in both periods.

Thus, the authors question the diversification benefits of gold equities, particularly over short investment horizons.”

3.8 According to de Roon, Frans A., Theo E. Nijman, and Chris Veld (2000). "Hedging Pressure Effects in

Futures Markets " Journal of Finance, “We present a simple model implying that futures risk premium depend on both

own-market and cross-market hedging pressures. Empirical evidence from 20 futures markets, divided into four groups

(financial, agricultural, mineral, and currency) indicate that, after controlling for systematic risk, both the futures own

hedging pressure and cross-hedging pressures from within the group significantly affect futures returns. These effects

remain significant after controlling for a measure of price pressure. Finally, we show that hedging pressure also contains

explanatory power for returns on the underlying asset, as predicted by the model.” (p. 1437).

3.9 According to Dusak, Katherine (1973). "Futures Trading and Investor Returns: An Investigation of

Commodity Market Risk Premiums." Journal of Political Economy, Vol. 81, No. 6 (November/December): 1387-

1406. “The long-standing controversy over whether speculators in a futures market earn a risk premium is analyzed

within the context of the capital asset pricing model recently developed by Sharpe, Linter, and others. Under that

approach the risk premium required on a futures contract should depend not on the variability of prices but on the extent

to which the variations in prices are systematically related to variations in the return on total wealth. The systematic risk

was estimated for a sample of wheat, corn, and soybean futures contracts over the period 1952 to 1967 and found to be

close to zero in all three cases. Average realized holding period returns on the contracts over the same period were close

to zero.” (p. 1387)

3.10. According to Edwards, Franklin R., and Jimmy Liew (1999). "Managed Commodity Futures" Journal of

Futures Markets, Vol. 19, No. 4 (June): 377-411. “The authors examine the performance of managed commodity

futures as represented by public commodity funds, commodity pool operators, and commodity trading advisers. The

authors indicate that the costs associated with investing in CPOs and CTAs may be quite large because the funds may

incur significant transaction costs, which are added to a number of fees charged to investors, including management fees,

profit-based incentive fees, and loads. Despite these relatively high costs, the authors find that the net return to

commodity fund investments is frequently relatively attractive. Each individual fund, however, has relatively volatile

returns, so the stand-alone performance of managed commodity futures is poor relative to traditional investments. The

authors find that, in general, adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances portfolio

performance. In addition, the authors compare the returns to CTAs and CPOs with the returns to the passive

Reuters/Jefferies CRB Index and the MLM. The MLM is a dynamic index based on momentum in commodity prices,

which is consistent with the strategy followed by many managed futures funds. The authors find a significant positive

relationship between the returns to managed futures and the MLM but no significant relationship between managed funds

and the CRB. This finding is consistent with the contention that the MLM provides a general indicator of the

performance of managed futures. The authors also find, however, that neither the MLM nor the CRB supplants managed

futures in their derived efficient portfolios.”

CHAPTER III

RESEARCH METHODOLOGY

The methodology of research indicates the general pattern of organizing the procedure of gathering valid and reliable data

for the problem under investigations (Kothari, 1996). The methodology of this study includes the choice of the research

approach, sampling technique, development of the tool, data collection procedure and method of analysis based on the

statement and objectives of the study.

Research approach

The selection of the research approach is the basic procedure for the conduct of research. A research approach tells the

investigator as to what data to collect and how to analyze it. It also suggests possible conclusion to be drawn from the

data.

The research approach refers to the investigator overall plan for obtaining answers to the research question and for testing

the research hypothesis. It spells out the strategies that the investigator adopts to develop information that is accurate,

objective and interpretable. It is set of flexible guide spots designed to keep the investigator in the right direction.(Polit

and Hungler, 1999).

4.1 RESEARCH DESIGN

Research design constitutes the blue print for the collection and analysis of the data. Research design is essential as

it facilitates the smooth sailing of various research operations so as to make the research as efficient as possible

yielding maximum information with minimum of effort, time, and money.

"Decisions regarding what, when, how, how much by what means concerning a research constitutes the research

design.” --C.R. Kothari

DESCRIPTIVE RESEARCH:

Descriptive Research includes surveys and fact - finding enquiries of different kinds of the major purpose of

descriptive research is description of the state of affairs as it exists at present. In social science and business research

we quite often use the term ex post facto research for description research studies.

SAMPLING UNIT

Business Men, Professionals, Employed personnel, others like House wife etc.

SAMPLE SIZE

A sample size of 120 investors was selected for the study in the Gobi Region.

METHOD OF DATA COLLECTION

Here the researcher mainly used primary data.

A. PRIMARY DATA

Data are collected for the first time for a specific purpose in mind using the questionnaire method and interview

method.

B. SECONDARY DATA

The secondary data was collected from the company Journals, Reports, Magazines, Internet and Materials obtained

from the commodity product in the regional Office.

4.2 SAMPLING TECHNIQUE

This sampling method involves purposive or deliberate selection of particular units of the universe for consulting a

sample, which represents the universe.

Non Probability- Convenience Sampling:

When population elements are selected for inclusion in the sample based on the ease of access it can be called

convenience sampling

4.3 TOOLS FOR ANALYSIS

1. Simple No. of Respondents in (%) analysis

2. Chi-Square Test

3. Correlation Analysis

4. Weighted Average

5. ANOVA

IN THIS PROJECT ONLY 3 TOOLS ARE USED:

1. SIMPLE NO.OF RESPONDENTS IN (%) ANALYSIS

No. of Respondents in (%) analysis is a simple and effective method used for analyzing collect data. It

provides clear distribution of respondent’s responses. Using this method we can get clear view of how

customer respondents to a specific query distributed among different options.

No. of Respondents in (%) = (Number of Respondent/ Total Respondents) X 100

2. CORRELATION ANALYSIS:

It is helps to determine the strength of linear between the two variables X &Y. In other words as to how

strongly are these two variables correlated. Karl Pearson, in 1986 developed and index or co-efficient of these

association in case where the relationship is a linear one. i.e. where the trend of the relationship can be

described by a straight line.

N Σ dx dy – (Σ dx) (Σ dy)

r = ------------------------------------------

√NΣdx² - (Σ dx) ² √NΣ dy² - (Σ dy) ²

3. WEIGHTED AVERAGE:

Weighted average may be defined as the average obtained multiplying the various item in serious by certain

values know as weighted and the total of products so obtained is dividend by the total of weighted.

Weighted Average = ( XW/ W)

Where,

W- No. of Respondents favoring in the opinion

X- Value of the score to the option.

CHAPTER IV

Data Interpretation & Analysis

1. SIMPLE NO.OF RESPONDENTS IN PERCENTAGE ANALYSIS

Table No 5.1: The table showing the Age Group of the Respondents

S.No Age group No. of Respondents No. of Respondents in (%)

1 Below 25 yrs 19 15.8

2 25-50 yrs 41 34.2

3 50-75 yrs 52 43.3

4 Above75 yrs 8 6.7

Total 120 100

Chart No 5.1: Age Group of the Respondents

16%

34%43%

7%

Age group of Respondents

Below 25 yrs25-50 yrs50-75 yrsAbove75 yrs

Inference:

From the above table, it is clear that 15.8% of the respondents are belongs to the age below 25yrs, 34.2% of

the respondents are belongs the age between 25 years to 50 years.43.3% of the respondents are belonging the age

between 50 years to 75 years. 6.7% of the respondents are belongs to above 75yrs of age group. Hence, the investors

belongs the age between 50 to 75 years are major investors in the market.

Table No 5.2: The table showing occupation of the Respondents

S.No Occupation No. of Respondents No. of Respondents in (%)

1 Business 33 27.5

2 Profession 46 38.33

3 Employed 27 22.5

4 Others 14 11.66

Total 120 100

Chart No: 5.2 The chart showing occupation of the Respondents

28%

38%

23%

12%

Occupations of Respondents

BusinessPrefessionEmployedOthers

Inference:

From the above table, it is reveals that 27.5% of the respondents are Businessmen, 38.3% of the respondents

are professional, 22.5% of the respondents are Employed & 11.6% of the respondents are private others. Hence, most of

the respondents are professionals.

Table No. : 5.3 The table showing Gender of the Respondents

S.No OccupationNo. of

Respondents

No. of Respondents

in (%)

1 Male 92 76.7

2 Female 28 23.3

Total 120 100

Chart No: 5.3: The chart showing Gender of the Respondents

Gender of Respondents Percentage

Male 92 76.7

Female 28 23.3

5

15

25

35

45

55

65

75

85

95

Gender of Respondents

Inference:

From the above table, it is notified that 76.7% of the respondents are Male and 23.3% of the respondents are Female.

Table No.5.4: The table showing Educational Qualifications of the Respondents

S.NoEducational

QualificationsNo. of Respondents No. of Respondents in (%)

1 Up to 12th 20 16.7

2 UG 48 40

3 PG 38 31.7

4 Others 14 11.7

Total 120 100

Chart No. 5.4: The chart showing Educational Qualifications of the Respondents

17%

40%

32%

12%

Educational Qualifications of Respondents

Up to 12thUGPGOthers

Inference:

From the above table, it is shows that 16.7% of the respondents are in the category of up to 12 th, 40% of the

respondent’s Educational qualifications are UG, 31.7% of the respondents are belongs to PG and 11.7% of the

respondent’s Educational qualifications are others. Hence, majority of the respondents are falls in UG.

Table No.5.5: The table showing Annual Income of the Respondents

S.No Annual Income No. of Respondents No.of Respondents in (%)

1 Below 2 Lakhs 40 33.3

2 2 Lakhs -4 Lakhs 28 23.3

3 4 Lakhs-6 Lakhs 23 19.2

4 Above 6 Lakhs 29 24.2

Total 120 100

Chart No: 5.5 : The chart showing Annual Income of the Respondents

33%

23%

19%

24%

Annual Income of Respondents

Below 2 Lakes2 lakes -4 lakes4 lakes-6 lakesAbove 6 Lakes

Inference:

From the above table, it is inferred that 33% of the respondent’s Annual income is Below 2 Lakhs, 23.3% of

the respondent’s Annual income is 2 Lakhs - 4 Lakhs, 19.2% of the respondent’s Annual income is 4 laks-6 lakhs and

24.2% of the respondents are belongs to above 6 Lakhs. Hence, most of the respondent’s annual income falls in below 2

lakhs.

Table No.5.6: The table showing Investment Objectives of the Respondents

S.No Investment ObjectivesNo. of

RespondentsNo.of Respondents in

(%)

1 High income 77 64.1

2 Reasonable income for safety 35 29.1

3 For Retirement welfare 8 6.7

4 Tax benefit 0 0

Total 120 100

Chart No.5.6: The chart showing Investment Objectives of the Respondents

64%

29%

7%

Investment Objectives of Respondents

High incomeReasonable income for safetyFor retirement welfareTax benefit

Inference:

From the above table, it is identified that 64.16% of the respondent’s investment objective is to earn high

Income, 29.16% of the respondent’s aim is as reasonable income for safety. 6.66% of the respondent’s objective is to for

retirement benefit and 0% of the respondent’s objective is to for tax Benefits. Hence, Most of the investors are aims at

earning the high income.

Table No.5.7: The table showing Investment portion of the Respondents income

S.No Investment portionNo. of

RespondentsNo. of Respondents in

(%)

1 Below 25% 37 30.83

2 25% -50% 43 35.83

3 50%-75% 35 29.16

4 Above 75% 5 4.16

Total 120 100

Chart No.5.7: The chart showing Investment portion of the Respondents income

31%

36%

29%

4%

Investment portion of the Respondents income

Below 25%25% -50%50%-75%Above 75%

Inference:

From the above table, it is find that 30.83% of the respondent’s investment portion of income is below 25%. 35.83% of

the respondent’s investment portion of income is between 25%-50%, 29.16% of the respondent’s investment portion of

income is between 50%-75%, and 4.16% of the respondent’s investment portion of income is above 4%. Hence, majority

of the respondent’s investment portion are in between 25 to 50%.

Table No.5.8: The table showing Risk taking capacity of the Respondents

S.No Risk taking capacityNo. of

RespondentsNo. of Respondents in (%)

1 Very high 20 16.66

2 High 24 20

3 Medium 26 21.66

4 Low 26 21.66

5 Very low 24 20

Total 120 100

Chart No.5.8: The chart showing Risk taking capacity of the Respondents

17%

20%

22%

22%

20%

Risk taking capacity of the Respondents

Very highHighMediumLowVery low

Inference:

From the above table, it is clearly shows that 16.67% of the respondent’s risk taking capacity is very high, 20% of the

respondent’s risk taking capacity is high, 21.66% of the respondent’s risk taking capacity is Medium, 21.66% of the

respondent’s risk taking capacity is low and 20% of the respondent’s risk taking capacity is very low. Hence, majority of

the respondents are willing to take medium risk in their investment.

Table No.5.9: The table showing Current Investment of the Respondents

S.No Current InvestmentNo. of

Respondents

No. of Respondents in

(%)

1 Below 1 lakhs 59 49.16

2 1 Lakhs -2 Lakhs 33 27.5

3 2 Lakhs -3 Lakhs 17 14.16

4 Above 3 Lakhs 11 9.16

Total 120 100

Chart No.5.9: The chart showing Current Investment of the Respondents

49%

28%

14%

9%

Current Investment of the Respondents

Below 1 laks1 lakes -2 lakes2 lakes -3 lakesAbove 3 lakes

Inference:

From the above table, it is reveals that 49.16% of the respondent’s current investment amount is below 1 Lakhs.27.5%

of the respondent’s current investment amount is between 1 Lakhs -2 Lakhs, 14.16% of the respondent’s current

investment amount is between 2 Lakhs -3 Lakhs, and 9.16% of the respondent’s current investment amount is above 3

Lakhs. Hence, most of the respondents (59) investment amount falls below 1 lakhs.

Table No.5.10: The table showing Investment advice of the Respondents

S.No Investment adviceNo. of


1 Friends 59 49.16

2 Family 21 17.5

3 Consultants 9 7.5

4 others 31 25.83

Total 120 100

Chart No.5.10: The chart showing Investment advice of the Respondents

49%

18%

8%

26%

Investment advice of the Respondents

FriendsFamilyConsultantsothers

Inference:

From the above table, it shows that 49.16% of the respondents are getting investment advice from their friends.17.5% of

the respondents are getting investment advice from their family, 7.5% of the respondents are getting investment advice

from their consultants and 25.83% of the respondents are getting investment advice from their others. Hence, It is found

that majority of the respondents are advised by their friends.

Table No.5.11: The table showing Various Investment preferences of the Respondents

S.No Investment avenues No. of No. of Respondents in (%)

Respondents1 Share 52 43.33

2 Mutual funds 26 21.66

3 Commodity market 32 26.66

4 Other savings 10 8.33

Total 120 100

Chart No.5.11: The chart showing Various Investment preferences of the Respondents

43%

22%

27%

8%

Various Investment preferences of the Re-spondents

ShareMutual fundsCommodity marketOther savings

Inference:

From the above table, it is noted that 43.33% of the respondents are prefer shares, 21.66% of the respondents are like to

invest in mutual investments ,26.66% of the respondents are preferring commodity market investment avenues, and

8.33% of the respondents are like to invest only in other savings like insurance , saving deposits.. Hence, we can

understand that majority of the respondents are interested to invest in shares only.

Table No.5.12: The table showing Source of know about the commodity market of the Respondents

S.No Source of know about the No. of No. of Respondents in

commodity market of the

RespondentsRespondents (%)

1 Friends 59 49.16

2 Dealers 5 4.166

3 Mass media 25 20.83

4 Officials of investment org. 23 19.16

Total 120 100

Chart No.5.12: The chart showing Source of know about the commodity market of the Respondents

53%

4%

22%

21%

No. of Respondents to know about Commodity Market Through

FriendsDealersMass mediaOfficials of investment organization

Inference:

From the above table, it is inferred that 49.16% of the respondents are getting know about commodity market through

friends, 4.16% of the respondents are knowing through dealers, 20.83% of the respondents are getting know about

commodity market through mass medias, and 19.16% of the respondents are came to know about commodity market

through officials of investment organizations. Hence, it’s clearly understood that most of the respondents are came to

know about commodity market through their friends.

Table No.5.13: The table showing Experience of the Respondents in commodity Trading

S.NoExperience in commodity

marketNo. of


1 Below 1 year 18 15

2 1-2 years 42 35

3 2-3 ears 23 19.16

4 More than 3 years 37 30.83

Total 120 100

Chart No.5.13: The chart showing Experience of the Respondents in commodity Trading

Below 1 year 1-2 years 2-3 ears More than 3 years0

5

10

15

20

25

30

35

40

45

Experience of the Respondents in commodity Trad-ing

No. of RespondentsPercentage

Inference:

From the above table, it is clearly indentified that 15% of the respondents are trading in commodity market below 1 year,

35% of the respondents are experienced between 1-2 years, 19.16% of the respondents are trading between 2-3 years and

30.83% of the respondents are experienced in commodity market more than 3 years. Hence, It’s concluded that majority

of the respondents are experienced in commodity market below 1-2 years.

Table No.5.14: The table showing the Frequency of Trading in commodity market of the respondents

S.No Frequency of TradingNo. of


1 Daily 103 85.832 Weekly 7 5.833 Monthly 3 2.54 Every season 2 1.665 Occasionally 3 2.56 Rarely 2 1.66

Total 120 100

Chart No.5.14: The chart showing Frequency of Trading in commodity market of the respondents

Daily Weekly Monthly Every season Occasionally Rarely

No. of Respon-dents

103 7 3 2 3 2

Percentage 85.8333333333333

5.83333333333335

2.5 1.66666666666667

2.5 1.66666666666667

105090

130170

Frequency of Trading in commodity market of the respondents

Inference:

From the above table, it is clear that 85.83% of the respondents are trading in commodity market in daily basis, 5.83% of

the respondent’s frequency of trading falls in weekly basis, 2.5% of the respondents are trading in monthly basis, 1.66%

of the respondents are trading in commodity market in every seasons, 2.5% of the respondent’s trading frequency is in

occasional basis, and 1.66% of the respondents are trading in commodity market in rarely. Hence, it’s reveals that most

of the investors are trading in commodity market in daily basis.

Table No.5.15: The table showing Awareness level of commodity market regulations and its circular

S.NoExperience in commodity

market

No. of

Respondents

No.of Respondents in

(%)

1 Very high 70 58.33

2 High 30 25

3 Medium 10 8.33

4 low 7 5.83

5 Very low 3 2.5

Total 120 100

Chart No.5.15: The chart showing Awareness level of commodity market regulations and its circular

Very high High Medium low Very low

No. of Re-spondents

70 30 10 7 3

Percentage 58.3333333333333

25 8.33333333333333

5.83333333333335

2.5

1030507090

110130

Awareness level of commodity market regulations and its circular

Inference:

From the above table, it is inferred that 58.33% of the respondent’s awareness level of market’s regulations and its

circulars is very high, 25% of the respondent’s awareness level falls in high, 8.33% of the respondents are moderately

aware about market’s regulations and its circulars, 5.83% of the respondents are having low level awareness of market’s

regulations and its circulars, and 2.5% of the respondents are not aware of market’s regulations and its circulars. Hence,

it’s concluded that out of the sample most of the respondent’s awareness level falls in the very high category.

Table No.5.16: The table showing Reason for Choosing Commodity Market of the Respondents

S.NoReason for Choosing

Commodity

No. of


1 High return 82 68.33

2 Moderate return 4 3.33

3 Safe return 4 3.33

4 Low Margin 30 25

Total 120 100

Chart No.5.16: The chart showing Reasons for Choosing Commodity Market of the Respondents

68%3%

3%

25%

Reason for Choosing Commodity Market of the Respondents

High returnModerate returnSafe returnLow Margin

Inference:

From the above table, it is found that 68.33% of the respondents are choosing the commodity market for getting High

return, 3.33% of the respondent’s reason for choosing commodity market is moderate return, 3.33% of the respondents

are prefer to choose the commodity market is for earning safety return, and 25% of the respondent’s reason for choosing

commodity market falls in low Margin. Hence, It’s inferred that majority of the respondents are likely to choose the

commodity market for getting high return.

Table No.5.17: The table showing Investors preference of commodity market of the respondents

Types of commodities

Very High

%High

%Mediu

m% low %

very Low

%

Plantation Products: Rubber,

17 14.16 15 12.5 14 11.66 34 28.33 40 33.33

Spices: Pepper,

Turmeric, Jeera,chilli,

coriander

17 14.16 20 16.66 18 15 32 26.66 33 27.5

Pulses: Chana

18 15 20 16.66 23 19.16 44 36.66 15 12.5

Fibres: V-797 kapas , shankar kapas

26 21.66 12 10 27 22.5 30 25 25 20.83

Cereals: Wheat, Barley,

23 19.16 15 12.5 25 20.83 31 25.83 26 21.66

Oil and Oil seeds: Castor seeds,

22 18.33 15 12.5 21 17.5 32 26.66 30 25

Others: Guar Seeds, Guar Gum,

15 12.5 14 11.66 22 18.33 33 27.5 36 30

Metals: Steel,

Copper, Zinc,

50 41.66 32 26.66 11 9.166 16 13.33 11 9.166

Energy: Crude Oil,

Thermal Coal,52 43.33 20 16.66 15 12.5 20 16.66 13 10.83

Precious Metals: Gold,

Gold (100 gms), Gold International,

Silver, Silver (5kg),

Silver International, Platinum

60 50 19 15.83 11 9.16 15 12.5 15 12.5

Others: CER,

Polyvinyl Chloride2 1.66 0 0 15 12.5 40 33.33 63 52.5

Chart No.5.17: The chart showing Investors preference of commodity market of the respondents

Inference:

From the above table it’s clearly found that

a) 33.3% of the respondents are not ready to prefer the plantation products,

b) Majority of the respondents i.e. 75.5% of the respondents are prefer only low level of spices products,

c) 36.7% of the respondents are likely to prefer only low level of pulses products,

d) 25 % of the respondent’s preference falls in low level of Fibers products,

e) 25.8% of the respondents are prefer low level of cereals products,

f) 26.7% of the respondents are prefer low level of oil seeds products and

g) 30% of the respondents are not prefer other foods products,

h) 41% of the respondents are very highly given their preference is metal products like steel, copper, etc.

i) 43% of the respondents are very highly preferred the Energy products like crude oil, natural gas etc.

j) 50% of the respondent’ s preference falls in the Precious products like gold,

k) 33.3% of the respondents are not prefer other metal products like polyvinyl,

l) Hence, from the above consolidated table it shows that majority of the investors preference is metal, energy and

precious metals.

Table No.5.18: The table showing Opinion of the respondents about the specialty of trading in commodity market

S.NoSpecialty of commodity

market

No. of


1 Price hedging 51 42.5

2 Regulated marketing 39 32.5

3 Low risk 20 16.66

4 Quality products 10 8.33

Total 120 100

Chart No.5.18: The chart showing Opinion of the respondents about the specialty of trading in commodity

market

43%

17%

33%

8%

Speciality of Commodity Market

price hedginglow riskregulated marketingquality products

Inference:

From the above table, it is clearly notify that 42.5% of the respondents are saying the specialty of the commodity trading

are price hedging, 32.5% of the respondents are saying the specialty of the commodity trading are regulated market,

16.66% of the respondent’s opinion about specialty of trading are low risk, and 8.33% of the respondents given their

opinion about the specialty of the commodity trading are quality products. Hence, form the above table it’s clearly

reveals that most of the respondents i.e., (51) are given their opinion about the specialty of this market is price hedging.

Table No.5.19: The table showing Level of acceptance of the respondents about luring advertisement, rumors etc.

Chart No.5.19: The chart showing Level of acceptance of the respondents about luring advertisement, rumors etc

68%

21%

10%

1% 1%

Level of acceptance of the respondents about lur-ing advertisement, rumors etc

Very highHighMediumLowVery low

Inference:

From the above table, it is found that 67.5% of the respondent’s level of acceptance about rumors and luring

advertisements is very high, 20.83% of the respondents are highly accepting about rumors and luring advertisements,

10% of the respondent’s level of acceptance about rumors and luring advertisements falls in medium, 0.83% of the

respondents are having very low level of acceptance about rumors and luring advertisements, and 0.83% of the

respondents are not accepting the rumors and luring advertisements. Hence, It’s concluded that majority of the investors

are very highly accepting the rumors & luring advertisements.

Table No.5.20: The table showing Respondents recommendation of others entering into the commodity market

S.NoLevel of acceptance of luring

advertisement, rumors etc

No. of

Respondents

No. of Respondents in

(%)

1 Very high 81 67.5

2 High 25 20.83

3 Medium 12 10

4 Low 1 0.83

5 Very low 1 0.83

Total 120 100

S.NoRespondents

recommendation to others

No. of


1 Definitely 75 62.5

2 Probably 33 27.5

3 Not sure 12 10

4 Never 0 0

Total 120 100

Chart No.5.20: The chart showing Respondents recommendation of others entering into the commodity market

63%

28%

10%

Respondents recommendation of others entering into the commodity market

Definitely Probably Not sure

Never

Inference:

From the above table, it is indentified that 62.5% of the respondents are recommends others enter into the commodity,

27.5 % of the respondents are probably recommends others enter into commodity market, and 10% of the respondents

are saying not sure to other entering into the commodity market. Hence, from the above table it’s clearly understood that

out of the total sample most of the respondents’ i.e. 75 of them are definitely recommending others to enter into the

market.

2. CORRELATION ANALYSIS

Table No.5.21: The table showing Correlation between Spices and metals

Spices (X) 17 20 18 32 33

Metal (Y) 50 32 11 16 11

Step 1: Calculation of Correlation


r = ------------------------------------------

√NΣdx² - (Σ dx) ² √NΣ dy² - (Σ dy) ²

Step2: Table No.5.22: Correlation between Spices and metals

X (X-24) dx dx² Y (Y-25) dy dy² dx dy

17 -7 49 50 25 625 -175

20 -4 16 32 7 49 -28

18 -6 36 11 -14 196 84

32 8 64 16 -9 81 -72

33 9 81 11 -14 196 -126

120 0 246 120 -5 1147 -317

r = -0.5980

Inference:

Since the correlation value should lies between -1 & +1. Here, r value is Negative, so there is No relationship

between spices and metals preference of the respondents.

Table No.23: The table showing correlation between Risk Taking capacity and precious metals

Risk Taking capacity (X) 20 24 26 26 24

precious metals (Y) 60 19 11 15 15

Step 1: Calculation of Correlation


r = ------------------------------------------

√NΣdx² - (Σ dx) ² √NΣ dy² - (Σ dy) ²

Step2: Table No.5.24: Calculation of Correlation

X (X-26) dx dx² Y (Y-30) dy dy² dx dy

20 -6 36 60 30 900 -180

24 -2 4 19 -11 121 22

26 0 0 11 -19 361 0

26 0 0 15 -15 225 0

24 -2 4 15 -15 225 30

120 -10 44 120 -30 1832 -128

r = -0.94441

Inference:

Since the correlation value should lies between -1 & +1.Here, r value is Negative, so there is no relationship

between Risk Taking capacity and precious metals preference of the respondents.

3. WEIGHTED AVERAGE ANALYSIS

Table No.5.25: The table showing opinion of the respondent’s preference of commodity market rating

Types of commoditiesVery High

High Medium lowvery Low

TotalRankin

g

Plantation Products: Rubber,

17 15 14 34 40 1209

Score 85 60 42 68 40 295

Spices: Pepper, Turmeric, Jeera,chilli, coriander

17 20 18 32 33 1207

Score 85 80 54 64 33 316

Pulses: Chana 18 20 23 44 15 1204

Score 90 80 69 88 15 342

Fibres: V-797 kapas , shankar kapas

26 12 27 30 25 1203

Score 130 48 81 60 25 344

Cereals: Wheat, Barley, 23 15 25 31 26 1205

Score 115 60 75 62 26 338

Oil and Oil seeds: Castor seeds,

22 15 21 32 30 1206

Score 110 60 63 64 30 327

Others: Guar Seeds, Guar Gum,

15 14 22 33 36 1208

Score 75 56 66 66 36 299

Metals: Steel, Copper, Zinc,

50 32 11 16 11 1201

Score 250 128 33 32 11 454

Energy: Crude Oil, Thermal Coal,

52 20 15 20 13 1202

Score 260 80 45 40 13 438

Precious Metals: Gold, Gold (100 gms), Gold International, Silver, Silver (5kg), Silver International, Platinum

60 19 11 15 15 1201

Score 300 76 33 30 15 454

Others: CER, Polyvinyl Chloride

2 0 15 40 63 12010

Score 10 0 45 80 63 198

Inference:

From the above table by the weighted average method, it’s observed that Precious Metals: Gold, Gold (100 gms), Gold

International, Silver, Silver (5kg), Silver International, Platinum commodities have 1 rank of investor’s preference,

Energy: Crude Oil, Thermal Coal, commodities having the 2nd Rank of the Investors preference. Fibres: V-797 kapas,

Shankar kapas commodities having the 3rd rank of among the investors preference. Therefore from the weighted average

method majority of the respondents very highly prefer to invest in the commodities like Precious Metal, Energy and

Fibres.

CHAPTER V

FINDINGS

5.1 FINDINGS OF THE STUDY

A. Simple No. of Respondents in (%) analysis

a) 15.8% of the respondents are belongs 25yrs of age Group, 34.2% of the respondents are age group between

25 yrs to 50 yrs.,43.3% of the respondents are between 50 to 75 yrs of age group, and 6.7% of the

respondents are the above 75 Yrs.

b) 27.5 % of the respondents are business people, 46% of the respondents are professionals, 27% of the

respondents are employed, and 14 % of the respondents are other occupations.

c) 76.7% of the respondents are male investors, and 23.3% of the respondents are female investors.

d) 16.7 % of the respondent’s qualification is below schooling, 40% of the respondent’s qualification is only

under graduates, 31.7% of the respondent’s qualification is post graduates and 11.7 % of the respondent’s

qualification is others like diplomas.

e) 33.3 % of the respondents annual incomes level is below than 2 Lakh, 23.3% of the respondents annual

incomes level is between 2 Lakh to 4Lakh, 19.2% of the respondent’s annual incomes level is in between 4

lakh to 6 lakh, and 24.2% of the respondents annual incomes level is above 6 lakh.

f) 64.2 % of the respondents investment objectives is High Income ,29.2% of the respondents investment

objectives is Reasonable income for safety , 6.7% of the respondents investment objectives is for retirement

welfare and 0% of the respondents an investment objective is tax benefits.

g) 30.8% of the respondents of investments portion from their income is below 25 %,35.8% of the respondents

of investments portion from their income is between 25% to 50%, 29.2% of the respondents of investments

portion from their income is between 50% to 75% and 4.2 % of the respondents of investments portion

from their income is above 75%.

h) 16.7 % of the respondents risk taking capacity is very high, 20% of the respondents risk taking capacity is

high, 21.7 % of the respondents risk taking capacity is medium, 21.7% of the respondents risk taking

capacity is low, and 20% of the respondents risk taking capacity is very low.

i) 49.2% of the respondent’s current investment is below 1 lakh, 27.5% of the respondent’s current investment

is between 1 lakh to 2 lakh, 14.2% of the respondents’ current investment is between 2 lakh to 3 lakh, 9.2%

of the respondent’s current investment is above 3 lakh.

j) 49.2% of the respondents are getting investments advice from their friends, 17.5% of the respondents are

getting investments advice from their family members,7.5% of the respondents are getting investments

advice from investment consultants and 25.8% of the respondents are getting investments advice from

others sources.

k) 43.3 % of the respondent’s higher preference of their investment avenues is shares, 21.7% of the

respondent’s investment preference is mutual funds, 26.7% of the respondent’s investment preference is

commodity markets and 8.3 % of the respondent’s investment preference is other savings.

l) 93.3 % of the respondents are well known about commodity market trading, and 6.7 % f the respondents

are not having much aware about commodity marketing.

m) 49.2% of the respondents are know about commodity market trading through their friends ,4.2% of the

respondents are know about commodity market trading through their investment traders, 20.8% of the

respondents are know about commodity market trading through mass media, 19.2% of the respondents are

know about commodity market trading through the official investment organizations.

n) 100% of the respondents are involved in commodity trading.

o) 15% of the respondents are having experience in commodity trading below 1 yr. 35% of the respondents are

having experience in commodity trading between 1 to 2 yrs, 19.2% of the respondents are having

experience in commodity trading between 2 to 3 yrs, and 30.8% of the respondents are having experience in

commodity trading more than 3 yrs.

p) 85.8 % of the respondents are daily traders, 5.8% of the respondents are weekly traders, 2.5% of the

respondents are monthly traders, 1.7% of the respondents are season traders, 2.5% of the respondents are

occasionally trade, and 1.7% of the respondents are trade rarely.

q) 58.3% of the respondents are very high aware of the commodity markets circular and its regulations , 25%

of the respondents are high level awareness of the commodity markets circular and its regulations, 8.3% of

the respondents are medium level of awareness about the commodity markets circular and its regulations,

5.8% of the respondents are having low level of awareness about their commodity markets circular and its

regulations, and 2.5% of the respondents are having very low level of awareness about their commodity

markets circular and its regulations,

r) 68.3% of the respondents are choosing commodity trade for high return. 3.3% of the respondents are

choosing commodity trade for moderate return, 3.3% of the respondents are choosing commodity trade for

safely return, and 25% of the respondents are choosing commodity trading because it’s required only low

margin.

s) 14.2% of the respondents are very highly prefer the plantation products like rubber, 12.5% of the

respondents are highly prefer the plantation products like rubber, 11.7% of the respondents are prefer

medium level of preference of the plantation products like rubber, and 28.3% of the respondents are prefer

low .33.3% of the respondents are very low to prefer the plantation products like rubber

t) 14.2% of the respondents are very highly prefer the spices products like pepper, turmeric, jeera, chilli,

coriander, 16.7% of the respondents are highly prefer the spices products like pepper, turmeric, jeera, chilli,

coriander, 15% of the respondents are moderate level of preference of spices products like pepper,

turmeric, jeera, chilli, coriander, 26.7 % of the respondents are prefer low level of preference of the spices

products like pepper, turmeric, jeera, chilli, coriander, and 27.5% of the respondents are very low to prefer

the spices products like pepper, turmeric, jeera, chilli, coriander.

u) 15% of the respondents are very highly prefer the pulses products like Chana, 16.7% of the respondents are

highly prefer the pulses products like Chana, 19.2% of the respondents are moderate level of preference in

pulses products like Chana, 36.7 % of the respondents are prefer low level of preference of the pulses

products like Chana, and 12.5% of the respondents are very low to prefer the pulses products like Chana.

v) 21.7% of the respondents are very highly prefer the Fibers products like V-797 Kapas, Shankar Kapas, 10%

of the respondents are highly prefer the Fibers products like V-797 Kapas, Shankar Kapas, 22.5% of the

respondents are moderate level of preference in Fibers products like V-797 Kapas, Shankar Kapas, 25 % of

the respondents are prefer low level of preference of the Fibers products like V-797 Kapas, Shankar Kapas,

and 20.8% of the respondents are very low to prefer the Fibers products like V-797 Kapas, Shankar Kapas.

w) 19.2% of the respondents are very highly prefer the Cereals products like wheat, barley,

maize-feed/industrial Grade, 12.5% of the respondents are highly prefer the Cereals products like wheat,

barley, maize-feed/industrial Grade, 20.8% of the respondents are moderate level of preference in Cereals

products like wheat, barley, maize-feed/industrial Grade, 25.8 % of the respondents are prefer low level of

preference of the Cereals products like wheat, barley, maize-feed/industrial Grade, and 21.7% of the

respondents are very low to prefer the Cereals products like wheat, barley, maize-feed/industrial Grade.

x) 18.3% of the respondents are very high to prefer the oil and oil seeds, 12.5% of the respondents are highly

to prefer the oil and oil seeds, 17.5% of the respondents are prefer it only the moderate level, 26.7% of the

respondents are prefer only low level and 25% of the respondents are very low to prefer the oil and oil

seeds.

y) 12.5% of the respondents are very high to prefer the other products like Guar Seeds, potato .11.7 % of the

respondents are prefer high level, 18.3 %of the respondents are prefer these products only moderate level,

27.5 % of the respondents are prefer it low level and 30 % of the respondents are not to prefer the other

products.

z) 41.7% of the respondents are very highly prefer metal products like steel, copper and nickel, 26.7% of the

respondents are highly prefer metal products like steel, copper and nicke.9.2l % of the respondents are

prefer it only moderate levels, 13.3% of the respondents are prefer only low level and 9.2 % of the

respondents are not to prefer the metals to invest.

aa) 43.3% of respondents are very high to prefer the energy products, 16.7 % of the respondents are highly

prefer it, 12.5 % of the respondents are only moderate level of preference, and 16.7% of the respondents are

very low to prefer it. and 10.81% of the respondents are not ready to prefer it

bb)50% of respondents are very high to prefer the Precious metals products, 15.8% of the respondents are

highly prefer it, 9.2% of the respondents are only moderate level of preference, 12.5% of the respondents

are very low to prefer, and 12.5 % of the respondents are not prefer it.

cc) 1.7% of the respondents are very highly prefer other products like Polyvinyl, 12.5 % of the respondents are

moderate level of preference , 33.3 % of the respondents are very low to prefer it ,52.5 % of the respondents

are not to prefer its.

dd)42.5 % of the respondents are saying about commodity market is price hedging, 32.5% of the respondents

are saying about commodity market is regulated marketing, 16.7% of the respondents are saying about

commodity market is low risk, and 8.3 % of the respondents are saying about commodity market is quality

products.

ee) 67.5% of the respondents are very highly accepted the commodity market advertisement and its rumors.

20.8% of the respondents are highly accept the commodity market advertisement and its rumors, 10% of the

respondents are moderate level of acceptance of the commodity market advertisement and its rumors, 0.8%

of the respondents are very low accepting the commodity market advertisement and its rumors and 0.8% of

the respondents are not to accept the commodity market advertisement and its rumors.

ff) 62.5% of the respondents are saying definitely recommend commodity trading to others, 27.5 % of the

respondents are probably others to trade in commodity market, 12% of the respondents are not ready to

recommend others to do in commodity trading.

B. Correlation Analysis

a) The correlation calculation between spices and metal, the correlation value i.e. r value is Negative, so

there is No relationship between spices and metals preference of the respondents.

b) The correlation calculation between Risk Taking capacity and precious metals, the correlation i.e. r

value is Negative, so there is no relationship between Risk Taking capacity and precious metals

preference of the respondents.

C. Weighted Average Method

a) From the weighted average method, it’s observed that Precious Metals: Gold,

Gold (100gms), Gold International, Silver, Silver (5kg), Silver International, Platinum

commodities have 1st rank of investor’s preference, Energy: Crude Oil, Thermal Coal,

commodities having the 2nd Rank of the Investors preference. Fibers: V-797 kapas,

Shankar kapas commodities having the 3rd rank of among the investors preference.

Therefore from the weighted average method majorly of the respondents are very

highly preferring to invest in the commodities like Precious Metal, Energy and Fibers.

CHAPTER 6

SUGGESTIONS AND CONCLUSION

6.1 SUGGESTIONS

a) Most of the investors are in male category. So Religare Commodities Pvt. Ltd advised to concentrate more

on getting the investment from female investors also.

b) Compared to Agri, energy, pharmacy sectors, the investors are willing to prefer bullion sector (GOLD). So

the firm should create awareness over other sectors.

c) Most of the investors getting the information from their friends, so the firm should increase the no. of

experts available in the market.

d) Some investors are hesitating to recommend investing in commodity market to other people. So, the firm

has to give proper guidelines to the investors about the investment in commodity market.

e) The arrangement of experts and specialist seminar for investors will help to improve their awareness.

f) The newsletters and special publishing will helps to create high awareness of commodity market among the

investors.

g) Through appropriate publicity and mass media advertisements the awareness of investors will raise up.

h) The present trend of commodity market should be continuously informed to the investors through telephone

or other devices.

6.2 CONCLUSION

The study is made to find out the investors preference towards commodity market. The study reveals that

commodity market is in a nascent stage. The investment avenues of individual investors depend mainly on

annual income and risk taking capacity .The female investors are not much aware of commodity market so

proper awareness program should be conducted to improve the awareness level of among them. The major

finds of the study is the majority of the respondents preference falls on precious metals.

Bibliography

1. en.wikipedia.org/wiki/Commodity_market

2. www.commoditiesstreetjournal.com/

3. www.religare.com

4. www.religarecommodities.com

5. www.mcxindia.com/

6. futures.tradingcharts.com/

7. www.indiainfoline.com › Markets

8. International financial management - “ P.G APTE”

APPENDICES

ANNEXURE-I

Questionnaire

Please read the following before you complete the questionnaire.

http://www.indiainfoline.com/Markets/

1. This survey is completely anonymous and confidential. Your participation is voluntary and return of the

questionnaire will be considered as consent to participate in the survey.

2. This questionnaire will take up approximately 10 minutes of your time.

3. Please answer all questions

4. Please be frank and honest in your answers.

5. If you wish to change your answer, please cross it out and clearly identify your new answer.

Name

Designation

Phone No.

E-mail Address

1. What is your age?

Below 25

25-50 yrs

50-75 yrs

Above 75 yrs

2. What is your gender?

Male

Female

3. What is your occupation?

Business

Profession

Employed

4. What is your educational qualification?

Up to 12th

UG

PG

5. What is your annual income?

Below 2 lakhs

2-5 lakhs

4-6 lakhs

Above 6 lakhs

6. What is your investment objective?

High income

Reasonable income for safety

For retirement welfare

Tax benefit

7. What is your investment portion of the income?

Below 25%

25% -50%

50% -70%

Above 75%

8. What is your risk taking capacity?

Very high

High

Medium

Low

Very low

9. What is your current investment?

Below 1lakh

1lakh - 2lakh

2lakh – 3lakh

Above 3 lakh

10. Who gave you the advice for investment?

Friends

Family

Consultants

Others

11. What are your various investment preferences?

Shares

Mutual funds

Commodity market

Other savings

12. How do you come to know about commodity market?

Friends

Dealers

Mass media

Officials of investment org.

13. How is your experience in commodity market?

Below 1 yr

1-2 yrs

2-3 yrs

More than 3 yrs

14. What is your frequency of trading in commodity markets?

Daily

weekly

Monthly

Every season

Occasionally

Rarely

15. What is your awareness level of commodity market regulations and its circular?

Very high

High

Medium

Low

Very low

16. What is your reason of choosing commodity market?

High return

Moderate return

Safe return

Low margin

17. What is your investment preference of commodity market?

Bullions

Precious metals

Spices

Pulses and chana

Others

18. What is your opinion about the specialty of trading in commodity market?

Price hedging

Regulated markting

Low risk

Quality products

19. What is your level of acceptance about luring advertisement, rumors etc?

Very high

High

Medium

Low

Very low

20. What is your recommendation for others entering into the commodity market?

Definitely

Probably

Not sure

Never

Summer Training Report

Documents

summer training

varun kumar

risk taking

soybean futures

forward market

online commodity

multi commodity

leading commodity