107750592054

7/31/2019 107750592054

1/61

EAST WEST CORRIDOR

SIGMA INSTITUTE OF MANAGEMENT STUDIES1

A

STUDY

ON

COMMODITY TRADING AN INDIAN PERSPECTIVE

AT

EAST WEST CORRIDOR

FRANCHISEE

OF

RELIANCE MONEY COMMODITY LTD.

A Project Report submitted in partial fulfilment of the requirements

For the awards of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BYRAHESH N. KAKADIYA

Under the guidance of

Ms. Iram Ada Khan

Submitted To:

SIGMA INSTITUTE OF MANAGEMENT STUDIES,

VADODARA.

(July-2011)

7/31/2019 107750592054

2/61

7/31/2019 107750592054

3/61

EAST WEST CORRIDOR


PREFACE

In the world, changing is the essence of time. Visiting an industrial unit is a golden

opportunity for the student of knows actual work of industry. The aim of these programmed

is to develop not only theoretical knowledge but also to give and improve practical studies in

every student, which is help all to him in every field in his future.

Here, I have prepared the project report on EAST WEST CORRIDORE

FEANCHISEE OF RELIANCE MONEY COMMODITY LTD., during the time

01/06/2011 to 12/07/2011 in this time. In this MBA, practical study is a compulsory for

every student to procure adequate knowledge in this field. I have completed my project

report on A STUDY ON COMMODITY TRADING AN INDIAN PERSPECTIVE

AT EAST WEST CORRIDORE FEANCHISEE OF RELIANCE MONEY

COMMODITY LTD.With tried my best with a great zeal & Gaiety.

7/31/2019 107750592054

4/61

EAST WEST CORRIDOR


ACKNOWLEDGEMENT

I am thankful to the coordinator of Institute of SIGMA INSTITUTE OF

MANAGEMENT STUDIES for giving an opportunity to come on this stage to complete

for the project.

I am also thankful to Ms. Iram Ada Khan for constant support and encouragement

as well as the valuable guidance and direction he had provided to me during the preparation

of entire my project report.

I find my project very useful and educative, it was very good experience for me in

the project, to me and discuss with the valuable information of COMMODITY

TRADING AN INDIAN PERSPECTIVE. I thank for them for being so helpful in my

project.With great pleasure I express my deep sense of gratitude to Ms. Kavita(Manager

of Commodity market) for his Guidance and support throughout my work.

I am also thankful to my friends who supported me during the project work.

Above all I express my hearty thanks to God Almighty, without his grace nothing would

have been possible.

RAHESH KAKADIYA

M.B.A (FINANCE)

7/31/2019 107750592054

5/61

EAST WEST CORRIDOR


Part Topic Page No.

A. Introduction: 6

-Industry profile

-Company profile

B. Literature Review 16

C. Research Methodology: 39

-Research Problem 40

-Objective of the Study 40

-Sample Design, Research design, Data collection

tools, etc.

40

-Benefits of the Study 42

-Limitations of study 42

D. Analysis of data 43

E. Findings 60

F. Recommendations 63

G. Conclusions 65

H. Bibliography 67

I Annexure 69

7/31/2019 107750592054

6/61

EAST WEST CORRIDOR


EXECUTIVE SUMMERY

India, a commodity based economy where two-third of the one billion population

depends on agricultural commodities, surprisingly has an under developed commodity

market. Unlike the physical market, futures markets trades in commodity are largely used as

risk management (hedging) mechanism on either physical commodity itself or open

positions in commodity stock.

For instance, a jeweller can hedge his inventory against perceived short-term

downturn in gold prices by going short in the future markets.

The article aims at know how of the commodities market and how the commodities

traded on the exchange. The idea is to understand the importance of commodity derivatives

and learn about the market from Indian point of view. In fact it was one of the most vibrant

markets till early 70s. Its development and growth was shunted due to numerous restrictions

earlier. Now, with most of these restrictions being removed, there is tremendous potential for

growth of this market in the country.

7/31/2019 107750592054

7/61

EAST WEST CORRIDOR


7/31/2019 107750592054

8/61

EAST WEST CORRIDOR


INDUSTRY PROFILE

COMMODITY TRADING AN INVESTORS PERSPECTIVE:

Points to be considered by investors in terms of investing in commodities market:

Follow the trends. This is probably some of the hardest advice for a trader to follow

because the personality of the typical futures trader is not "one of the crowd." Futures

traders (and futures brokers) are highly individualistic.

Apply money management techniques to your trading.

Trade with the trends, rather than trying to pick tops and bottoms

Calculate the risk/reward ratio before putting a trade on, then guard against the risk

of holding it too long

Establish trading plans before the market opening to eliminate emotional reactions

Follow the plan. Once a position is established and stops are selected, do not get out

unless the stop is reached, or the fundamental reason for taking the position changes

Use technical signals (charts) to maintain disciplinethe vast majority of traders are

not emotionally equipped to stay disciplined without some technical tools. Use

discipline to eliminate impulse trading

Have a disciplined, detailed trading plan for each trade; i.e., entry, objective, exit,

with no changes unless hard data changes. Disciplined money management means

intelligent trading allocation and risk management. The overall objective is end-of-

year bottom line, not each individual trade

Use a disciplined trade selection system...an organized, systematic process to

eliminate impulse or emotional trading

Trade with a plan not with hope, greed, or fear. Plan where you will get in themarket, plan how much you will risk on the trade, and plan where you will take your

profits.

Learn to trade from the short side. Most people would rather own something (go

long) than owe something (go short). Markets can (and should) also be traded frown

the short side.

Broker/client psychology must be in tune, or else the broker and client should part

company early in the program. Client and broker should be in touch repeatedly, so

7/31/2019 107750592054

9/61

EAST WEST CORRIDOR


when the time comes, both parties are mentally programmed to take the necessary

action without delay

Anyone who is inclined to speculate in futures should look at speculation as a

business, and treat it as such. Do not regard it as a pure gamble, as so many people

do. If speculation is a business, anyone in that business should learn and understand

it to the best of his ability.

Approach the markets with a reasonable time goal. When you open an account with a

broker, don't just decide on the amount of money, decide on the length of time you

should trade. This approach helps you conserve your equity, and helps avoid the Las

Vegas approach of "Well, I'll trade till my stake runs out." Experience shows that

many who have been at it over a long period of time end up making money.

Always use stop orders, always...always... always.

Basics of Futures trading for an investor:

Trading commodity futures and options is not for everyone. It is a volatile, complex,

and risky business. Before you invest any money in futures or options contracts, you should:

Consider the financial experience, goals, and financial resources and know how

much can afford to lose above and beyond your initial payment.

Understand commodity futures and option contracts and obligations in entering into

those contracts.

Understand exposure to risk and other aspects of trading by thoroughly reviewing the

risk disclosure documents broker is required to give you.

The brochures will provide with general information about trading commodity futures

and options. We encourage you to ask more questions and gather more information before

you open an account.

The also issues consumer advisories to alert the public to warning signs of possible

fraudulent activity and offer precautions individuals should take before committing funds.

We encourage you to review these advisories before you trade.

Additionally, you may wish to visit the National Futures Association (NFA) Investor

Services web site for more information and related publications.

7/31/2019 107750592054

10/61

EAST WEST CORRIDOR


How is Money Made and Lost Trading Commodity Futures?

GOING LONG & SHORT:

Going LONG & SHORTto make a profit on anything requires that

something be bought and sold, and that you sell at a higher price than you buy. Whentrading a futures contract it doesnt matter if you initially sell or buy, as long as you

do both before the contract comes due. If you were bearish you would sell, or another

word would be go short. If you were bullish you would want to buy, or go long.

"How to sell something that is not own, or why would one buy something which

is not needed". The answer is simple. When trading futures, you never actually buy

or sell anything tangible; you are just contracting to do so at a future date. You are

merely taking a buying or selling position as a speculator, expecting to profit from

rising or falling prices. You have no intention of making or taking delivery of the

commodity you are trading, your only goal is to buy low and sell high, or vice-versa.

Before the contract expires you will need to relieve your contractual obligation to

take or make delivery by offsetting (also known as unwind, or liquidate) your initial

position. Therefore, if you originally entered a short position, to exit you would buy,

and if you had originally entered a long position, to exit you would sell.

Electronic form of commodity trading:

The move to electronic trading in the commodities markets, ongoing

deregulation and the pressure to increase trading margins are all making it more important

than ever for you to improve trading efficiencies.

Now theres a unique trading solution that lets you execute across multiple

execution Venuesfully integrated within your desktop.

The Routing for Commodities technology facilitates an open and neutral order

Routing hub hosted by energy traders and incorporating Tray ports trading technology.

It allows continued connection by traders to their existing trading pools* and

easier future connection to other execution venues.

7/31/2019 107750592054

11/61

EAST WEST CORRIDOR


Execute on the best price for each instrument and carry out trades across

multiple marketplaces simultaneously. It all adds up to increased productivity and a

competitive advantage so crucial in todays fast-paced energy markets.

Trader for Commodities to meet your needs.

With Order Routing for Commodities, youre able to:

Trade more, at lower risk, increasing both company profits and individual bonuses

Gain increased trading confidence from being able to instantly compare prices from

your execution venues

Increase trading volume without alerting the market and raising prices

Reduce the number of trading screens and hardware providing for less distraction and

maintenance on the desktop.

Reduce error costs and resource demands and optimize reconciliation and

settlement using the consolidated feed of deal ticket information from the multiple execution

venues to your mid- and back-office systems.

7/31/2019 107750592054

12/61

EAST WEST CORRIDOR


BRIEF VIEW ABOUT COMMODITIY MARKET

COMMODITY:-

A commodity may be defined as an article, a product or material that is bought

and sold. It can be classified as every kind of movable property, except Actionable Claims,

Money & Securities.

Commodities actually offer immense potential to become a separate asset class

for market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to

understand the equity markets, may find commodities an unfathomable market. But

commodities are easy to understand as far as fundamentals of demand and supply are

concerned. Retail investors should understand the risks and advantages of trading in

commodities futures before taking a leap. Historically, pricing in commodities futures has

been less volatile compared with equity and bonds, thus providing an efficient portfolio

diversification option.

In fact, the size of the commodities markets in India is also quite significant. Of

the country's GDP of Rs 13, 20,730 crore (Rs 13,207.3 billion), commodities related (and

dependent) industries constitute about 58 per cent.

Currently, the various commodities across the country clock an annual turnover

of Rs 1, 40,000 crore (Rs 1,400 billion). With the introduction of futures trading, the size

of the commodities market grows many folds here on.

A Commodity includes all kinds of goods. FCRA defines "goods" as "every kind

of movable property other than actionable claims, money and securities". Futures' trading

is organized in such goods or commodities as are permitted by the Central Government. Atpresent, all goods and products of agricultural (including plantation), mineral and fossil

origin are allowed for futures trading under the auspices of the commodity exchanges

recognized under the FCRA.

7/31/2019 107750592054

13/61

EAST WEST CORRIDOR


COMMODITY MARKET

Commodity market is an important constituent of the financial markets of any

country. It is the market where a wide range of products, viz., precious metals, base metals,

crude oil, energy and soft commodities like palm oil, coffee etc. are traded. It is important

to develop a vibrant, active and liquid commodity market. This would help investors hedge

their commodity risk, take speculative positions in commodities and exploit arbitrage

opportunities in the market.

DIFFERENT TYPES OF COMMODITIES TRADE:

World-over one will find that a market exits for almost all the commodities known to us.

These commodities can be broadly classified into the following:

Precious Metals: Gold, Silver, Platinum etc

Other Metals: Nickel, Aluminium, Copper etc

Agro-Based Commodities: Wheat, Corn, Cotton, Oils, Oilseeds.

Soft Commodities: Coffee, Cocoa, Sugar etc

Live-Stock: Live Cattle, Pork Bellies etc

Energy: Crude Oil, Natural Gas, Gasoline etc

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.

Consequently four commodity exchanges have been approved to commence

business in this regard. They are Multi Commodity Exchange (MCX) located at Mumbai.

National Commodity and Derivatives Exchange Ltd (NCDEX) located at Mumbai.

National Board of Trade (NBOT) located at Indore. National Multi Commodity Exchange

7/31/2019 107750592054

14/61

EAST WEST CORRIDOR


(NMCE) located at Ahmedabad.

COMMODITY EXCHANGES IN INDIA

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:

National Commodity & Derivatives Exchange Limited (NCDEX)

Multi Commodity Exchange of India Limited (MCX)

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

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.

CRISIL has assigned a CCR AA rating to the National Commodity &

Derivatives Exchange Limited (NCDEX). This is the first credit rating assigned to an

Indian exchange. The CCR AA indicates high degree of strength with regard to

honouring debt obligations. However, it is not a rating of a debt instrument of NCDEX.
http://finance.indiamart.com/markets/commodity/ncdex.htmlhttp://finance.indiamart.com/markets/commodity/mcx.htmlhttp://finance.indiamart.com/markets/commodity/mcx.htmlhttp://finance.indiamart.com/markets/commodity/nmceil.htmlhttp://finance.indiamart.com/markets/commodity/ncdex.htmlhttp://finance.indiamart.com/markets/commodity/ncdex.htmlhttp://finance.indiamart.com/markets/commodity/ncdex.htmlhttp://finance.indiamart.com/markets/commodity/nmceil.htmlhttp://finance.indiamart.com/markets/commodity/mcx.htmlhttp://finance.indiamart.com/markets/commodity/ncdex.html

7/31/2019 107750592054

15/61

EAST WEST CORRIDOR


NCDEX is one of Indias three online multi-commodity exchanges, and has a

strong position in the Indian agricultural (agri) commodities segment, with a share of more

than 80 per cent in the trading of most agri-commodities. Agri-commodities contribute

about 90 per cent of NCDEXs turnover. To bring in greater diversity, the exchange is

focusing on precious metals trading, and also plans to introduce trading in other metals and

energy products.NCDEX offers futures contracts on 51 commodities. The daily average

turnover during 2005-06 was Rs. 34.51 billion.

Multi Commodity Exchange of India Limited (MCX)

Headquartered in Mumbai Multi Commodity Exchange of India Limited

(MCX), is an independent and de-mutulised 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.

National Multi-Commodity Exchange of India Limited (NMCEIL)

National Multi Commodity Exchange of India Limited (NMCEIL) is the first

de-mutualised, Electronic Multi-Commodity Exchange in India. On 25th July, 2001, it was

granted approval by the Government to organise 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 organised 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.
http://finance.indiamart.com/markets/commodity/nmceil.htmlhttp://finance.indiamart.com/markets/commodity/nmceil.htmlhttp://finance.indiamart.com/markets/commodity/nmceil.html

7/31/2019 107750592054

16/61

EAST WEST CORRIDOR


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 elses 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.

FUTURES CONTRACT OF COMMODITY TRADING:

A futures contract is a type of "forward contract". FCRA defines forward

contract as "a contract for the delivery of goods and which not a ready delivery contract

is". Under the Act, a ready delivery contract is one, which provides for the delivery of

goods and the payment of price there fore, either immediately or within such period not

exceeding 11 days after the date of the contract, subject to such conditions as may be

prescribed by the Central Government. A ready delivery contract is required by law to be

fulfilled by giving and taking the physical delivery of goods. In market parlance, the ready

delivery contracts are commonly known as "spot" or "cash" contracts. All contracts in

commodities providing for delivery of goods and/or payment of price after 11 days from

the date of the contract are "forward" contracts. Forward contracts are of two types -

"Specific Delivery Contracts" and "Futures Contracts". Specific delivery contracts provide

for the actual delivery of specific quantities and types of goods during a specified future

period, and

In which the names of both the buyer and the seller are mentioned. The term

'Futures contract' is nowhere defined in the FCRA. But the Act implies that it is a forward

contract, which is not a specific delivery contract. However, being a forward contract, it is

necessarily "a contract for the delivery of goods". A futures contract in which delivery is

not intended is void (i.e., not enforceable by law), and is, therefore, not permitted for

trading at any commodity exchange.

7/31/2019 107750592054

17/61

7/31/2019 107750592054

18/61

EAST WEST CORRIDOR


Reliance Money Commodities Ltd.

Reliance Money Commodities Ltd. was incorporated on 1st June 2005 & is

mainly carrying on the broking business in the commodity market with a client base of

around 600 clients. The company has acquired memberships of the two major commodity

exchanges of India viz. National Commodity & Derivatives Exchange Ltd. (NCDEX) &

Multi-Commodity Exchange of India Ltd. (MCX) The Companys registered office issituated at B/4-Ganga palace, Nr. Kotak house, Ghod-dod road, Surat.

COMPANY PROFILE

East West Corridor was incorporated on November 10, 2003 & is mainly

carrying on the broking business in the equity market. The company has acquired

memberships of the two major stock exchanges of India viz. National Stock Exchange of

India Ltd. (NSE) & Bombay Stock Exchange Ltd. (BSE). The company is also registered

as a Depository Participant (DP) with Central Depository Services (I) Ltd. (CDSL). The

companys registered office is situated at

B/4-Ganga palace,

Nr. Kotak house

Ghod-dod road,

Surat.

The company commenced its BSE operations from October 4, 2004 & its NSE

operations from 17th March 2005. Since incorporation the company has been consistently

growing with the present client base of around 34000+ clients in Know Your Client (KYC)

and 21000+ clients in Depository Participants (DP). The company has approximately 250

outlets to cater to the needs of the investors for their equity trading in the stock exchanges.

East West Corridor has also started trading in Currency Derivative Segment

with memberships in MCX Stock Exchange Ltd (MCX-SX) , National Stock Exchange of

India (NSE) and Bombay Stock Exchange Limited (BSE) in the year 2008.

7/31/2019 107750592054

19/61

EAST WEST CORRIDOR


Mission :

To provide World Class Services and create Wealth for everyone.

Vision 2015:

To be the most preferred Organization providing all financial services across the country.

Value:

Integrity and Ethics

Change

People Development

Customer Delight

Security

7/31/2019 107750592054

20/61

EAST WEST CORRIDOR


7/31/2019 107750592054

21/61

7/31/2019 107750592054

22/61

EAST WEST CORRIDOR


All Above Information helping to know the historical trend of the Bullion

commodity Market all over the world. And It helps to Investor to predict the future

trend of the Bullion Commodity Market.

Trend analysis is based on the idea that what has happened in the past

gives traders an idea of what will happen in the future.

There are three main types of trends: short-, intermediate- and long-term.

Trend analysis tries to predict a trend like a bull market run and ride that

trend until data suggests a trend reversal (e.g. bull to bear market). Trend analysis

is helpful because moving with trends, and not against them, will lead to profit for an

investor.

Outsourcing Trend Analysis to India

Get the competitive advantage with Trend Analysis. Get significant insights

into customers and markets to guide your company's marketing, investment, and

administration objectives.

"With the past, we can see trajectories into the future - both catastrophic and creative

projections. JohnRalston Saul.

Importance of Concept

Data analysis including Trend Analysis is essential for a firm's competitive

intelligence program. The ability to accurately gauge customer response to changes

in business and other environmental parameters is a powerful competitive

advantage.

Trend Analysis is essential to running an organization's value chains and

in acquiring and consolidating corporate success. It allows business users to make

analytical decisions about those business processes that maximize revenue from

core customers.

With the information explosion, an incredible amount of information is

available to organizations. However, raw data by itself does not provide much

7/31/2019 107750592054

23/61

EAST WEST CORRIDOR


information. It is the conversion of this raw data into significant facts, relationships,

trends and patterns, that could otherwise go unobserved.

This makes Trend Analysis an essential part of running an organization's

value chains and in acquiring and consolidating corporate success. It allows

business users to make analytical decisions about what direction the business

should target its resources on and to focus on those business processes that

maximize revenue from core customers.

Trend Analysis Proper - Allows you to plot aggregated response data over time.

This is especially valuable, if you are conducting a long running survey and would

like to measure differences in perception and responses over time. Thus Trend

Analysis provides an insight into the following:

Changes and trends in customer needs and behavior, and shifts in the

customers' perception of value.

Trend in price change and cost drivers for the industry and/or specific

segments

Change and evolution of the industry in terms of new entrants, and

competition, threat of substitutes and relationship with buyers and

suppliers

Upcoming business models and changing best practices of the

industry and related emerging sectors

In depth analysis of long term industry, domestic and global economic

cycles and trends.

What are the benefits of Trend Analysis?

1. Detailed Trend Analysis - to predict the threat of new entrants and allows

management to develop competitive strategies thus enabling industry

position as well as pursuit of leadership.

2. It provides security of strategic investments and protection of assets.

3. Enables crucial decisions on mergers and acquisitions as well as the ability to

develop alliances and partner relationships.

7/31/2019 107750592054

24/61

EAST WEST CORRIDOR


4. Trend Analysis data can be further used for various cost/benefit analyses.

And can be extremely valuable as an early warning indicator of probable

issues with product line and service level changes.

5. Trend Analysis enables a business to view strategies from a long-term

perspective with respect to effective asset and investment deployment and

can safeguard against costly errors in relationship management and strategic

positioning.

The advantages of Trend Analysis

The ability to accurately gauge customer response to changes in

business and other environmental parameters is a powerful competitive advantage.

Furthermore O2I's trend analysis includes the process of studying data to gain

insights into long-term trends such as failure patterns that can be applied to incident

and problem management as well as capacity management.

Internal and external users can apply Trend Analysis to determine

weaknesses and strengths. This will enable internal users to enhance administration

efficiency of the company when necessary and external users to form valuation

models of the company based on how well the company is managed.

What if you could make your investment decision at the very first idication

that a trend is beginning, before most everyone else? Here are 10 ideas to

consider when investing.

Risk Diversify Information moves the markets

You can count on human behaviour Look everywhere

Timing is everything. When does the news begin to have an impact on sector

prices?

All sectors are not created equal.

Trend Pointers monitors the most intriguing sectors and those that are just

emerging

If you only could know one thing

You need a trend partner. You cannot rely just on the financial experts- they

are often wrong .

7/31/2019 107750592054

25/61

7/31/2019 107750592054

26/61

EAST WEST CORRIDOR


TECHNICAL ANALYSIS

Technical analysis involves using quasi-statistical techniques and formal statistics

to identify the trend and pattern of time series data. Usually price data is put on chart and

inference is made out based on some principles that are called indicators. Technical analyst

uses following information for charting purpose.

Open, High, Low and Closing price

Open Interest

Volume

Few indicators are listed below that a technical analyst often usage in his analysis.

Trend lines

Support and Resistance

Moving Average

Divergence

RSI

Oscillators

MACD

Fibonacci Retracement

Elliot wave pattern

Candlestick chart pattern

There are mainly three types of chart, which is popular amongst analyst.

Candlestick

Bar Chart

Line Chart

7/31/2019 107750592054

27/61

EAST WEST CORRIDOR


TTRRAADDIINNGG,, CCLLEEAARRIINNGG AANNDD SSEETTTTLLEEMMEENNTT IINN CCOOMMMMOODDIITTEESS TTRRAADDIINNGG

Every market transaction consists of three components namely trading, clearing

& settlement. However, there is not much difference in trading, clearing & settlement system

of commodities exchanges who offer online trading facilities viz NMCE, NCDEX & MCX.

In India, maximum volume of trading transaction happens at NCDEX & MCX. This section

gives brief idea about how transition happen at MCX platform.

MCX (Multy Commodity Exchange)

MCX is an independent and de-mutulised multi commodity exchange. It was

inaugurated on November 10, 2003 by Mr. Mukesh Ambani, Chairman and Managing

Director, Reliance Industries Ltd., and has permanent recognition from the Government of

India for facilitating online trading, clearing and settlement operations for commodity

futures markets across the country.

Headquartered in the financial capital of India, Mumbai, MCX is led by an

expert management team with deep domain knowledge of the commodity futures markets.

The integration of dedicated resources, robust technology and scalable infrastructure, has

helped MCX record many firsts since its inception.

Being a nation-wide commodity exchange having a robust infrastructure,

offering multiple commodities for trading with wide reach and penetration, MCX is well

placed to tap the vast potential poised by the commodities market. MCX offers a wide

spectrum of opportunities to a large cross section of participants including Producers/

Processors, Traders, Corporate, Regional Trading Centers, Importers, Exporters, Co-

operatives and Industry Associations amongst others.

VISION AND MISSION OF MCX

The vision of MCX is to revolutionize the Indian commodity markets by

empowering the market participants through innovative product offerings and business rules

so that the benefits of futures markets can be fully realized. Offering 'unparalleled

efficiencies', 'unlimited growth' and 'infinite opportunities' to all the market participants.

7/31/2019 107750592054

28/61

EAST WEST CORRIDOR


At MCX we believe that performance excellence and affordability would be

the key drivers in promoting and popularizing Commodities Futures trading in the country.

Exchanges in the new economy will be driven by strong service availability backed by

superior technology and MCX is well poised to emerge as the "Exchange of Choice" for the

commodity futures trading community.

PRODUCTS TRADED ON MCX

Commodities

Gold, Gold HNI, Gold M, I-Gold, Silver, Silver HNI, Silver M

Castor Oil, Castor Seeds, Coconut Cake, Coconut Oil, Cottonseed,

Crude Palm Oil, Groundnut Oil,

Kapasia Khalli (Cottonseed Oilcake), Mustard /Rapeseed Oil,

Mustard Seed (Sirsa), RBD Palmolein, Refined Soy Oil, Refined

Sunflower Oil, Rice Bran Refined Oil, Sesame Seed, Soymeal, Soy

Seeds

Cardamom,Jeera,Pepper,Red Chilli

Aluminium,Copper,Lead,Nickel,Sponge Iron, Steel Flat,Steel Long

(Bhavnagar),

Steel Long (Gobindgarh),Tin, Zinc

Cotton Long Staple ,

Cotton Medium Staple,

Cotton Short Staple,Cotton Yarn,Kapas

Chana, Masur,Tur, Urad, Yellow Peas,
http://www.mcxindia.com/silver.aspxhttp://www.mcxindia.com/coconutcake_contract.aspxhttp://www.mcxindia.com/coconutcake_contract.aspxhttp://www.mcxindia.com/coconutcake_contract.aspxhttp://www.mcxindia.com/coconutoil_contract.aspxhttp://www.mcxindia.com/cottonseed.aspxhttp://www.mcxindia.com/cottonseed.aspxhttp://www.mcxindia.com/palm_oil.aspxhttp://www.mcxindia.com/palm_oil.aspxhttp://www.mcxindia.com/groundnut_oil.aspxhttp://www.mcxindia.com/cottonseed_oilcake.aspxhttp://www.mcxindia.com/cottonseed_oilcake.aspxhttp://www.mcxindia.com/mustard_seed_oil.aspxhttp://www.mcxindia.com/Mustard_Seed_Sirsa.aspxhttp://www.mcxindia.com/Mustard_Seed_Sirsa.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/Refined%20Sunflower%20Oil_contract.aspxhttp://www.mcxindia.com/Refined%20Sunflower%20Oil_contract.aspxhttp://www.mcxindia.com/Refined%20Sunflower%20Oil_contract.aspxhttp://www.mcxindia.com/ricebranref_oil.aspxhttp://www.mcxindia.com/soymeal.aspxhttp://www.mcxindia.com/soymeal.aspxhttp://www.mcxindia.com/soy_seed.aspxhttp://www.mcxindia.com/soy_seed.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/cardmom.aspxhttp://www.mcxindia.com/jeera.aspxhttp://www.mcxindia.com/jeera.aspxhttp://www.mcxindia.com/pepper.aspxhttp://www.mcxindia.com/pepper.aspxhttp://www.mcxindia.com/pepper.aspxhttp://www.mcxindia.com/aluminium.aspxhttp://www.mcxindia.com/copper_res.aspxhttp://www.mcxindia.com/copper_res.aspxhttp://www.mcxindia.com/copper_res.aspxhttp://www.mcxindia.com/lead_res.aspxhttp://www.mcxindia.com/nickel_res.aspxhttp://www.mcxindia.com/nickel_res.aspxhttp://www.mcxindia.com/spongeiron.aspxhttp://www.mcxindia.com/spongeiron.aspxhttp://www.mcxindia.com/spongeiron.aspxhttp://www.mcxindia.com/steel_long_bhavnagar.aspxhttp://www.mcxindia.com/steel_long_bhavnagar.aspxhttp://www.mcxindia.com/Steel_Long_Govindgarh.aspxhttp://www.mcxindia.com/Steel_Long_Govindgarh.aspxhttp://www.mcxindia.com/tin_res.aspxhttp://www.mcxindia.com/tin_res.aspxhttp://www.mcxindia.com/tin_res.aspxhttp://www.mcxindia.com/long_staple_cotton.aspxhttp://www.mcxindia.com/medium_staple_cotton.aspxhttp://www.mcxindia.com/medium_staple_cotton.aspxhttp://www.mcxindia.com/short_staple_cotton_contract.aspxhttp://www.mcxindia.com/cottonyarn.aspxhttp://www.mcxindia.com/cottonyarn.aspxhttp://www.mcxindia.com/kapas_res.aspxhttp://www.mcxindia.com/kapas_res.aspxhttp://www.mcxindia.com/kapas_res.aspxhttp://www.mcxindia.com/chana_res.aspxhttp://www.mcxindia.com/tur.aspxhttp://www.mcxindia.com/tur.aspxhttp://www.mcxindia.com/yellow_peas_res.aspxhttp://www.mcxindia.com/yellow_peas_res.aspxhttp://www.mcxindia.com/tur.aspxhttp://www.mcxindia.com/tur.aspxhttp://www.mcxindia.com/chana_res.aspxhttp://www.mcxindia.com/chana_res.aspxhttp://www.mcxindia.com/kapas_res.aspxhttp://www.mcxindia.com/cottonyarn.aspxhttp://www.mcxindia.com/short_staple_cotton_contract.aspxhttp://www.mcxindia.com/medium_staple_cotton.aspxhttp://www.mcxindia.com/long_staple_cotton.aspxhttp://www.mcxindia.com/tin_res.aspxhttp://www.mcxindia.com/tin_res.aspxhttp://www.mcxindia.com/Steel_Long_Govindgarh.aspxhttp://www.mcxindia.com/Steel_Long_Govindgarh.aspxhttp://www.mcxindia.com/steel_long_bhavnagar.aspxhttp://www.mcxindia.com/steel_long_bhavnagar.aspxhttp://www.mcxindia.com/spongeiron.aspxhttp://www.mcxindia.com/spongeiron.aspxhttp://www.mcxindia.com/nickel_res.aspxhttp://www.mcxindia.com/lead_res.aspxhttp://www.mcxindia.com/copper_res.aspxhttp://www.mcxindia.com/aluminium.aspxhttp://www.mcxindia.com/pepper.aspxhttp://www.mcxindia.com/jeera.aspxhttp://www.mcxindia.com/cardmom.aspxhttp://www.mcxindia.com/groundnut_oil.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/soy_seed.aspxhttp://www.mcxindia.com/soy_seed.aspxhttp://www.mcxindia.com/soymeal.aspxhttp://www.mcxindia.com/ricebranref_oil.aspxhttp://www.mcxindia.com/ricebranref_oil.aspxhttp://www.mcxindia.com/Refined%20Sunflower%20Oil_contract.aspxhttp://www.mcxindia.com/Refined%20Sunflower%20Oil_contract.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/rbd.aspxhttp://www.mcxindia.com/Mustard_Seed_Sirsa.aspxhttp://www.mcxindia.com/mustard_seed_oil.aspxhttp://www.mcxindia.com/mustard_seed_oil.aspxhttp://www.mcxindia.com/cottonseed_oilcake.aspxhttp://www.mcxindia.com/groundnut_oil.aspxhttp://www.mcxindia.com/groundnut_oil.aspxhttp://www.mcxindia.com/palm_oil.aspxhttp://www.mcxindia.com/cottonseed.aspxhttp://www.mcxindia.com/coconutoil_contract.aspxhttp://www.mcxindia.com/coconutoil_contract.aspxhttp://www.mcxindia.com/coconutcake_contract.aspxhttp://www.mcxindia.com/silver.aspx

7/31/2019 107750592054

29/61

EAST WEST CORRIDOR


Basmati Rice, Maize,Rice,Sarbati Rice, Wheat

Brent Crude Oil,Crude Oil,Furnace OilMiddle East Sour Crude Oil

Arecanut, Cashew Kernel,Rubber

High Density Polyethylene (HDPE),

Polypropylene (PP), PVC

Guar Seed,Guargum,Gurchaku,Mentha Oil,Potato,Sugar M-30,Sugar

S-30,
http://www.mcxindia.com/bas_rice.aspxhttp://www.mcxindia.com/rice.aspxhttp://www.mcxindia.com/rice.aspxhttp://www.mcxindia.com/Sarbati_rice_contract.aspxhttp://www.mcxindia.com/Sarbati_rice_contract.aspxhttp://www.mcxindia.com/Sarbati_rice_contract.aspxhttp://www.mcxindia.com/wheat.aspxhttp://www.mcxindia.com/wheat.aspxhttp://www.mcxindia.com/BrentCrude_oil.aspxhttp://www.mcxindia.com/BrentCrude_oil.aspxhttp://www.mcxindia.com/Crude_oil.aspxhttp://www.mcxindia.com/Crude_oil.aspxhttp://www.mcxindia.com/furnaceoil.aspxhttp://www.mcxindia.com/furnaceoil.aspxhttp://www.mcxindia.com/sour_crudeoil.aspxhttp://www.mcxindia.com/sour_crudeoil.aspxhttp://www.mcxindia.com/sour_crudeoil.aspxhttp://www.mcxindia.com/Arecanut.aspxhttp://www.mcxindia.com/rubber.aspxhttp://www.mcxindia.com/rubber.aspxhttp://www.mcxindia.com/rubber.aspxhttp://www.mcxindia.com/High_Density_Polyethylene.aspxhttp://www.mcxindia.com/High_Density_Polyethylene.aspxhttp://www.mcxindia.com/Polypropylene.aspxhttp://www.mcxindia.com/Polypropylene.aspxhttp://www.mcxindia.com/guar_seed_res.aspxhttp://www.mcxindia.com/guar_seed_res.aspxhttp://www.mcxindia.com/Guar_Gum.aspxhttp://www.mcxindia.com/Guar_Gum.aspxhttp://www.mcxindia.com/Gur_Contract.aspxhttp://www.mcxindia.com/Gur_Contract.aspxhttp://www.mcxindia.com/Menthaoil.aspxhttp://www.mcxindia.com/Menthaoil.aspxhttp://www.mcxindia.com/potato.aspxhttp://www.mcxindia.com/potato.aspxhttp://www.mcxindia.com/SugarM30_Contract.aspxhttp://www.mcxindia.com/SugarM30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarS30_Contract.aspxhttp://www.mcxindia.com/SugarM30_Contract.aspxhttp://www.mcxindia.com/potato.aspxhttp://www.mcxindia.com/Menthaoil.aspxhttp://www.mcxindia.com/Gur_Contract.aspxhttp://www.mcxindia.com/Guar_Gum.aspxhttp://www.mcxindia.com/guar_seed_res.aspxhttp://www.mcxindia.com/Polypropylene.aspxhttp://www.mcxindia.com/Polypropylene.aspxhttp://www.mcxindia.com/High_Density_Polyethylene.aspxhttp://www.mcxindia.com/rubber.aspxhttp://www.mcxindia.com/Arecanut.aspxhttp://www.mcxindia.com/Arecanut.aspxhttp://www.mcxindia.com/sour_crudeoil.aspxhttp://www.mcxindia.com/furnaceoil.aspxhttp://www.mcxindia.com/Crude_oil.aspxhttp://www.mcxindia.com/BrentCrude_oil.aspxhttp://www.mcxindia.com/wheat.aspxhttp://www.mcxindia.com/Sarbati_rice_contract.aspxhttp://www.mcxindia.com/rice.aspxhttp://www.mcxindia.com/bas_rice.aspxhttp://www.mcxindia.com/bas_rice.aspx

7/31/2019 107750592054

30/61

EAST WEST CORRIDOR


7/31/2019 107750592054

31/61

EAST WEST CORRIDOR


RESEARCH METHODOLOGY

RESEARCH PROBLEM

The research begins with the identification of research problem To check thepenetration level of commodity derivatives among the respondents. Hence the study begins

with Exploratory study of commodity market. To know the answer of what is commodity

market? What commodity Derivative is? Why to trade/ how to trade on commodity market?

Who are its participants? etc. At the end of the exploratory study, Formal studies begin.

Making the base of these studies, research design, research instrument and involvement of

precious procedure and data source specifications were made.

OBJECTIVE OF THE STUDY

1. To know the views and attitude of the traders already trading in commodities.

2. To analyse the needs of the traders from the brokers so that brokers can efficiently

maintain and increase their client base for commodities.

3. To find out the economic and financial aspects about the commodity market.

4. To understand the concept of derivatives and how financial derivatives are different

from commodity derivatives.

5. To find out the expectation of the people from the investment solution provided.

6. The risk taking ability of the traders in the commodities segment can be found out.

SAMPLE DESIGN

The major participants of commodity derivative research were from Surat city

and especially the traders from the various textile markets in the city.

A sample size of 100 was taken, as the number of traders for commodities in

Surat city is less as compared to other investment avenues.

7/31/2019 107750592054

32/61

EAST WEST CORRIDOR


RESEARCH DESIGN

The sampling method used was Simple Random Probability Sampling.

Snowball Sampling was also used, as the number of respondents who traded in commodities

was very less. Through the Casual and Exploratory study of commodity derivative a

Questionnaire was designed. Communicational (personal interview) Approach was adopted

for gathering the data and important information. After this a systematic arrangement of data

was made for analysis. The analysis was done using different charts and findings from them.

DATA COLLECTION

The data collection was done in two phases. The first phase consisted of

collecting the Secondary data from reference books and other web sites so as to get

information about the commodity derivatives.

In the second phase the primary data was collected through survey. The questionnaire was

used to gather data.

QUESTIONNAIRE DESIGN

A structured Questionnaire was used for the survey. Both Rating and Ranking

type of questions were used in framing the questionnaire.

DATA ANALYSIS

As the data was collected from the survey with the help of the questionnaires,

it was later analysed and tabulated to make various comparisons. The data was then feed into

the excel sheets to form the charts and tables for easy graphical comparisons and

understanding of the data.

7/31/2019 107750592054

33/61

7/31/2019 107750592054

34/61

EAST WEST CORRIDOR


7/31/2019 107750592054

35/61

EAST WEST CORRIDOR


Q1. Do you invest in Capital Market?

Yes No

OBJECTIVE

To know the general response of the respondent if he/she is interested in investing in

Capital Market.

Yes No

75 25

INTERPRETATION:

The overall response of the respondents was quite cooperative with a few exceptions

saying that told their main investment was only in their respective business.

Q2. In which of these products do you invest?

Bank Deposit Equity Derivatives

Mutual Fund Insurance Postal Savings

Govt. Bonds Commodity Jewelry

Others ____________________

75%

25%

Yes

No

7/31/2019 107750592054

36/61

EAST WEST CORRIDOR


OBJECTIVE

The question is framed to know the different investment options that people usually use.

Instruments No. Of Respondent

Bank Deposit 20

Equity 5

Derivatives 13

Mutual Fund 7

Insurance 5

Postal Savings 14

Govt. Bonds 6

Commodity 25

Jewellery 3

Others 2 (Business)

INTERPRETATION:

The above graph shows the general tendency of the investors, which is more

towards the bank deposits wherein 20 people have invested. The bank deposits have

continued to be the most favourite of the instruments considered for investment. The bank

deposit is followed by insurance with around 5 people who are investing in various

insurance schemes. The equity segment has a 5 respondents investing in the cash market and

so on...........

20

5

13

75

14

6

25

3 2Bank depsite

Equity

Derivative

Mutual fund

insurance

postel savings

Govt.bond

commodity

jwellaery

others

7/31/2019 107750592054

37/61

EAST WEST CORRIDOR


Q3. Have you invested in commodity market?

Yes No

OBJECTIVE

The crux of this research starts from this question where it is analysed if an investor

invests specifically in the commodity market.

Yes No

60 40

INTERPRETATION:

From among the total number of respondents the number of people investing

in commodity derivative was 60 whereas the rest of the respondents either did not invest in

derivatives or just invested in the futures and options available in shares.

60%

40%

Yes

No

7/31/2019 107750592054

38/61

EAST WEST CORRIDOR


Q4. Which Exchange do you prefer for trading in commodity?

International National

NYMEX MCX

LME NCDEX

DubaiGold

Others _______

OBJECTIVE

From among the various exchanges available to find the most preferred exchange among the

respondents.

InternationalNational

MCX NCDEX

0 56 44

INTERPRETATION:

The above table shows that the Mutlti-Commodity Exchange (MCX) has a

comparatively higher preference over National Multi-Commodity & Derivatives Exchange

(NCDEX). Unfortunately no respondents were met who traded in the various international

exchanges.

56%

44%MCX

NCDEX

7/31/2019 107750592054

39/61

EAST WEST CORRIDOR


Q5. In commodity have you invested in any of the following?

Metals Agricultural Products Energy

OBJECTIVE

The main three classifications into which the products at the exchange are divided

into and the segment in which a commodity trader would like to trade in.


40 35 25

INTERPRETATION:

From the above table we can say that the traders prefer the metal products to

agriculture and energy. This preference can be due to the lack of basic knowledge in the agro

products.

40%

35%

25%

Metals

Agricultural Products

Energy

7/31/2019 107750592054

40/61

EAST WEST CORRIDOR


Q6. Since when are you investing in commodities?

0 - 6 months 6 months 1 year 1 year and above

OBJECTIVE

The time frame since when the respondents are investing in the commodities

market is analysed over here.

0-6 months 6 months1 year 1 year and above

7 13 40

INTERPRETATION:

The commodity market, which was started from year 2003, has gained pretty

much momentum in few years. A large number of respondents are those who trade in the

commodities segment for the past one year and above.

11%

22%

67%

0-6 months

6 months 1 year

1 year and above

7/31/2019 107750592054

41/61

7/31/2019 107750592054

42/61

7/31/2019 107750592054

43/61

7/31/2019 107750592054

44/61

EAST WEST CORRIDOR


Yes No

OBJECTIVE

The risk taking capacity of the traders can be analysed over here by checking

if the respondents take a precautionary measure as soon as they take a position.

Yes No

38 22

INTERPRETATION:

Here it is visible that the respondents are too cautious towards theirinvestments in commodities segment. They take a stop-loss when they take a position

whether short or long. This helps them to square off their position in case the amount of their

commodities goes beyond a limit set by them.

Q12. What kind of services do you expect from your broker?

63%

37%

Yes

No

7/31/2019 107750592054

45/61

EAST WEST CORRIDOR


Information Advisory Buy/Sell

Low Transaction Cost Brand Name

Efficient Follow-up Convenience of Online Service

Trading through years/Trust All services under one roof

Efficient Response to Queries

OBJECTIVE

To find out the products or services that is demanded by the respondents from

their brokers.

Information 10

Advisory Buy/Sell 21

Low Transaction Cost 25

Brand Name 12

Efficient Follow-up 7

Convenience of Online Service 10

Trading through years/Trust 3

All services under one roof 5

Efficient Response to Queries 7

7/31/2019 107750592054

46/61

EAST WEST CORRIDOR


INTERPRETATION:

The general expectation of the traders from their brokers is that the

transaction cost be as minimal as possible. The low transaction cost attribute has gained the

maximum preference, which is followed by the advisory to buy/sell.

The convenience of having online service is also preferred by a fair amount of

respondents and then the brand name and the efficient response to queries.

10%

21%

25%

12%

7%

10%

3%

5%

7%

Information

Advisory Buy/Sell

Low Transaction Cost

Brand Name

Efficient Follow-up

Convenience of Online

Service

Trading through years/Trust

All services under one roof

7/31/2019 107750592054

47/61

EAST WEST CORRIDOR


Q13. On whom do you depend to make decisions in commodity investments?

Broker Own-Self Others__________________

OBJECTIVE

The question analysis the ratio between the brokers and the trader on the

decision making part.

Broker Own-Self

26 34

INTERPRETATION:

Here we can see that majority of the respondents make the decisions for

trading on their own. This can be due to the fact that we have seen above wherein a large

number of respondents have been trading in the commodity segment from more than a year.

43%

57%

Broker

Own-Self

7/31/2019 107750592054

48/61

EAST WEST CORRIDOR


Q14. The market is open for nearly 13.5 hours, do you think this is preferable?

Yes No

OBJECTIVE

The market which is open for nearly 13.5 hours may not be feasible for many

and for this reason this question tries to find out the number of people who think that it is

preferable to have it open for so long.

Yes No

37 23

INTERPRETATION:The market which is open for a more than half a day is feasible for a majority

of people as they think that they can get opportunity for squaring off their transactions

during the day itself as the positions are updated to the closing value of the day, which may

prove to cause a loss on the whole transaction.

62%

38%

yes

no

7/31/2019 107750592054

49/61

EAST WEST CORRIDOR


7/31/2019 107750592054

50/61

EAST WEST CORRIDOR


FINDINGS

The research that was done by me on the penetration level of the traders in the

commodities segment reflects the following results.

The investments made in different avenues is as follows

Instruments No. Of Respondent

Bank Deposit 20

Equity 5

Derivatives 13

Mutual Fund 7

Insurance 5

Postal Savings 14

Govt. Bonds 6

Commodity 25

Jewellery 3

Others 2 (Business)

Most of the traders do invest in bank fixed deposits, which is then followed by

equity, derivatives and insurance.

The number of investors in commodity segment is quite less as compared to other

investment avenues. From among the total number of respondents the number of

people investing in commodity derivative was 60 whereas the rest of the respondents

either did not invest in derivatives or just invested in the futures and options available

in shares.

Traders prefer metals and energy products most and most of the trades are done on

Multi-Commodity Exchange.

There are traders who are investing in commodities segment from more than 1 year

and also people do trade on a average volume as high as 50 lakhs and above.

7/31/2019 107750592054

51/61

EAST WEST CORRIDOR


People use both fundamental and technical analysis to make their trading decisions

with most of traders trading in either intraday or long-term rather than the spreads.

The market, which is open for 13.5 hours, is felt as feasible for majority of the

respondents as the Indian market pretty much goes parallel with the international

markets.

7/31/2019 107750592054

52/61

EAST WEST CORRIDOR


7/31/2019 107750592054

53/61

EAST WEST CORRIDOR


RECOMMENDATION

After studying about commodities trading and making survey on investment

pattern in capital market and commodities, following recommendations are suggested in

context to stock broking house and commodities broking house.

It is suggested to commodities broking house to take some steps like:

The stockbrokers should focus on giving their customers right kind of advice while in

the initial stages of the investor in the commodity segment so that he may get the full

knowledge and gain maximum returns.

Once the investor is confident enough and has enough experience in this trade he can

be concentrated towards higher investments.

On the brokers hand it would be better if they convince their clients to use the stop

loss mechanism and to diversify their investment in the various commodities so that

they can prevent the clients from incurring a high loss and thus loosing trust on the

commodities market.

On the traders part they mostly use the fundamental techniques on the same

hand the broker should focus on the technical statistics also so that they can convince and

match with the traders view and hence make wise decisions.

7/31/2019 107750592054

54/61

7/31/2019 107750592054

55/61

EAST WEST CORRIDOR


CONCLUSION

The majority of the respondents have invested their savings in diversified investment

options like the bank fixed deposit, insurance, equity etc.

The commodities segment is rapidly gaining grounds in Surat city but still has not

reached its full potential as many people still consider it as a risky investment option.

The majority of the respondents prefer the Multi-Commodity Exchange as most of

trade is done in bullion products.

As only agro products are traded on NCDEX it is not so widely preferred by the

traders.

The risk taking ability among the respondents is high so as to gain maximum returns.

7/31/2019 107750592054

56/61

EAST WEST CORRIDOR


7/31/2019 107750592054

57/61

EAST WEST CORRIDOR


BIBLIOGRAPHY

REFERENCE BOOKS:

NCFM Module on Commodity Trading

NCFM Module on Derivatives

Business Research Methods, Donald R. Copper & Pamela S. Schindler

WEBSITES:

www.mcxindia.com

www.ncdexindia.com

www.tradersedgeindia.com/stop_loss.htm

www.ask4fno.com

www.commoditytrader.com

7/31/2019 107750592054

58/61

EAST WEST CORRIDOR


7/31/2019 107750592054

59/61

EAST WEST CORRIDOR


ANNEXURE

QUESTIONNAIRE

Q1. Do you invest in Capital Market?

Yes No

Q2. In which of these products do you invest?

Bank Deposit Equity Derivative Mutual Fund

Postal Savings Govt. Bonds Real Estate Insurance

Jewelry Others ____________________

Q3. Have you invested in commodity market?

Yes No

Q4. Which Exchange do you prefer for trading in commodity?

International National

NYMEX MCX

LME NCDEX

Dubai Gold

Others _______

Q5. In commodity have you invested in any of the following?


7/31/2019 107750592054

60/61

EAST WEST CORRIDOR


Q6. Which factor do you consider as important while investing?

(Rank them)

[ ] Max Return [ ] Safety [ ] Liquidity [ ] Tax Benefi

[ ] Product Knowledge [ ] Diversification

Q7. Since when are you investing in commodities?

0 - 6 months 6 months 1 year 1 year and above

Q8. On what volume do you usually trade per day?

0 5 lakh 5 lakh 50 lakhs

50 lakhs

1 crore 1 crore and above

Q9. Which strategy do you usually use for trade?

Intraday Long-term Hedging

Commodity Spread Calendar Spread

Q10. On which basis do you usually formulate your strategy?

Fundamental Technical

Q11. Do you use Stop-loss mechanism?

Yes No

Q12. What kind of services do you expect from your broker?

Information Advisory Buy/Sell

Low Transaction Cost Brand Name

Efficient Follow-up Convenience of Online Service

Trading through years/Trust All services under one roof

Efficient Response to Queries

7/31/2019 107750592054

61/61

EAST WEST CORRIDOR

Q13. On whom do you depend to make decisions in commodity investments?

Broker Own-Self Others________________

Q14. The market is open for nearly 13.5 hours, do you think this is preferable?

Yes No

Name: - ......................................................................................................

Address: - .......................................................................................................

.......................................................................................................

Phone No: - ................................. Mobile No: - .......................................

Occupation: -..............................

Thank You

107750592054

Documents