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An insight into
Commodity & CurrencyMarkets
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Agenda
Introduction to Commodity Markets
Introduction to Currency Markets
Services offered by Acmiil
Risk Management
Report & its Uses
Trading Basics
Operational Modalities
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Understanding Commodity Market
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Why should one look at commodities?
One of the biggest markets in the world
Smaller number of commodities traded than number of companies listed in
equities
Easier to understand, since price movements are based on basic economicprinciples of demand and supply
Lower margins required
Low correlation with equity markets, hence a perfect hedging option against
stock market volatility
Help diversify investment, with decent returns on a lower risk scale
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Factors Influencing Prices
• Agri – Commodities
– Weather at all the producing centers
– Import and Exports Policy.
– The Supply – Demand situation in specific commodity
– Government policies and regulation.
– World Demands and Supply.
– Acreages & arrivals in Mandis.
– Exports orders from other countries.
• Metals & Energy
– Geopolitical
– Global Inflation & interest Rate
– Weather Watch
– Currency fluctuation
– World Supply & Demand Disruption.
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Turning point – NCDEX and MCX
Logic behind launching commodity exchanges:-• Fair Price Indicator
• Hedging and Arbitrage
• Bulky Traders
• Investment opportunities
At the Commodity exchanges, only futures trading is permitted.
Like any other future contract, Commodity Futures are agreements to buysell something at a later date and at a price that has been fixed earlier by thebuyer and seller. Commodity futures contracts have to specify the quality ofgoods being traded. The commodity exchanges guarantee that the buyers andsellers will stick to the terms of the agreement.
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Commodities Traded
Category Commodity
Bullion Gold, Silver
Energy Crude Oil, Natural Gas
Metals Copper, Zinc, Lead, Nickel, Aluminum, Steel
Spices Pepper, Red Chilli, Jeera, Turmeric, Cardamom
Pulses Channa, Tur
Others Refined Soy Oil, Mentha Oil, Rubber, Guarseed, Guar gum, Soy seeds etc
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Important Terms
•
Initial margin: The up-front money that must be entered by a customer at a timeof entering into a contract.
• Exposure margin: The margin money charged by the exchange to ensure thatthe initial margin does not go below a particular level.
• Additional margin: In case of sudden higher-than-expected volatility, theexchange calls for additional margin, which is a preemptive move to prevent abreakdown.
• Mark-to-Market (MTM): At the end of each trading day, the margin account isadjusted to reflect the trader's gain or loss. This is known as marking to marketthe account of each trader.
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Contract Information
COMMODITY LOT SIZE PRICE QUOTE CLOSING PRICE MARGIN IN % MARGIN VALUE ONTRACT VALUE OFIT / LOSS Per
ALUMINI 1MT 1KG 108.60 5.00 5,430.00 108,600.00 1,000.00
ALUMINIUM 5MT 1KG 108.60 5.00 27,150.00 543,000.00 5,000.00CARDAMOM 100KG 1KG 583.20 80.00 46,656.00 58,320.00 100.00
COPPER 1MT 1KG 420.05 5.00 21,002.50 420,050.00 1,000.00
COPPERM 250KG 1KG 420.05 5.00 5,250.63 105,012.50 250.00
COTTON 25BLS 1BLS 19,650.00 5.00 24,562.50 491,250.00 25.00
CPO 10MT 10KG 501.30 5.00 25,065.00 501,300.00 1,000.00
CRUDEOIL 100 BARREL 1 BARREL 6,357.00 5.58 35,472.06 635,700.00 100.00
GOLD 1KG 10GM 26,743.00 4.20 112,320.60 2,674,300.00 100.00
GOLDGUINEA 8GRAM 8GRAM 21,335.00 4.00 853.40 21,335.00 1.00
GOLDM 100GM 10GM 26,758.00 4.15 11,104.57 267,580.00 10.00
GOLDPETAL 1GM 1GM 2,671.00 4.00 106.84 2,671.00 1.00
GUARGUM 1MT 100 KGS 20,401.00 48.00 97,924.80 204,010.00 10.00
GUARSEED 1MT 100 KGS 7,109.00 38.00 27,014.20 71,090.00 10.00
KAPAS 900.00 20KG 993.00 5.00 9,930.00 198,600.00 200.00
LEAD 5MT 1KG 123.80 5.00 30,950.00 619,000.00 5,000.00
LEADMINI 1MT 1KG 123.80 5.00 6,190.00 123,800.00 1,000.00
MENTHAOIL 360KG 1KG 944.20 17.33 58,906.75 339,912.00 360.00
NATURALGAS 1,250.00 1 MMBTU 218.90 6.63 18,141.34 273,625.00 1,250.00
NICKEL 250KG 1KG 823.20 6.00 12,348.00 205,800.00 250.00
NICKELM 100KG 1 KG 823.20 6.00 4,939.20 82,320.00 100.00
POTATO 300MT 100KG 726.50 45.41 98,971.10 217,950.00 300.00
SILVER 30KG 1KG 41,480.00 6.53 81,259.32 1,244,400.00 30.00
SILVER1000 1KG 1KG 41,262.00 5.05 2,083.73 41,262.00 1.00
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Market Timings
Monday to Friday,
Agricultural Commodities
10:00 am - 5:00 pm
Bullion (Gold, Silver) ,Crude Oil , Metals10:00 am - 11:55 pm
Saturday
All Commodities10:00 am – 2:00 pm
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Types of Clients
User of commodities (Hedgers)
Commodity Trader(Speculator)
Investor – Retail & HNI (Investor)
Client Type
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Precious Metals
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1.International currency
2.Safe commodity
3.Brings liquidity to market
4.Portfolio Diversification
5.Hedge against inflation
Characteristics of Gold
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Gold returns
YEAR GOLD PRICES RS 10 gms Return(%)
2007 10598
2008 13630 28.61%
2009 16686 22.42%
2010 20728 24.22%
2011 29433 41.99%
2012 32464 10.29%
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Total Fabrication demand forecast to be around 10% higher year-on-
year in 2010.
Industrial off take expected to recover by more than 65 Moz for full year
2010, or 18% in 2011
Photographic demand continues to contract, mainly due to ongoing
substitution by digital technology.
Jewelry & Silverware demand combined will decline marginally year-on-
year. (Jewelry actually up a little basis substitution gains at gold expense)
Coin demand continues to rise
Demand for Silver
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Industrial and decorative uses, photography and jewellery &
silverware.
Electrical and Electronics
Solar Energy
Medical Applications
Uses of Silver
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Cost effective for retail clients (e.g. at CMP Rs. 53400/-Margindeposit required is Rs. 2670/-Only)
Can be used as portfolio diversification tool for retail clients
having exposure to other assets
Kind of SIP investment in commodity market for clients who want
to start investing mainly in silver
Silver Micro Right Product For Retail investor
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Silver Returns and Volatality
YEAR SILVER PRICES RS 10 gms Return(%)
2007 19463
2008 18355 -5.69%
2009 26771 45.85%
2010 46217 72.64%
2011 73600 59.25%
2012 65723 -10.70%
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Price Comparision
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Why Crude Oil?
Crude Oil is also known as Black Gold
Dark, sticky liquid found in earth's crust
Scientifically known as hydrocarbon as it a compound
of hydrogen and carbon
Key factor in each and every economy of the world
Major cause of Inflation and Recession
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Understanding Currency Market
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Market Structure
Reserve Bank of India
MCX NSE USE
SEBI BANKS FEDAI
FX BROKERS
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Why should one look at currencies?
Its the largest financial market in the world
4 currency pair traded on the exchange making it easier to trade
Low risk product as highly regulated
Lower margins required
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Factors Influencing Prices
Macro Economic Factors
Monetary Action/Policy
RBI intervention
Dollar Liquidity
Economic and Political Scenario
Micro Economic Factors
Global Sentiments
Performance of Other Currencies
Geo Political SituationsCommodity Price Movements
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Contract Information
CURRENCY LOT SIZE PRICE QUOTE CLOSING PRICE MARGIN IN % MARGIN VALUECONTRACT VALUE PROFIT /LOSS Per Rs
EURINR 1,000.00 1.00 78.31 2.50 1,957.75 78,310.00 1000
GBPINR 1,000.00 1.00 90.61 2.50 2,265.25 90,610.00 1000
JPYINR 1,000.00 100.00 60.45 2.50 1,511.25 60,450.00 1000
USDINR 1,000.00 1.00 60.10 7.00 4,207.00 60,100.00 1000
Above chart is the daily FDMR also available on RC log in,updated on a daily basis
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Product Specification
Daily settlement
• Closing price of each contract – last 30 minutes weighted average
• T + 1
•Through your clearing member
• Paid or received in cash
Final settlement
•
RBI fixing price at 12 noon on last trading day• Net settled in cash
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Market Timings
Monday to Friday
NSE Currency Derivatives
09:00 am - 5:00 pm
Saturday
Non Working
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Types of Clients
User of currency (Hedgers)
Currency Trader(Speculator)
Investor – Retail & HNI
Client Type
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MARKET ACTIVITY
Hedging
Banks
Importers & Exporters
Corporate
Trading Speculation
View on appreciation or depreciation of USD,EUR,GBP,JPY against INR
Arbitrage
Inter market (OTC forwards and NSE - futures)
Inter exchange ( NSE and MCX-SX, NSE and DGCX)
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OTC vs Exchange traded futures
OTC Market Exchange Traded Future
Price transparency High; online real time screen
Liquidity Subject to credit limits Margins equate all participants
Settlement Full notional, unless cancelled Net settled in INR
Credit Exposure
Execution Only banks
Margins / MTM
Low; bilateral contracts withbanks
Exposure to your counterparty(bank)
Clearing corporation guaranteesall trades
500+ trading members,including banks
Margins usually not required, noMTM
Margins and MTM aremandatory
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Services offered by ACMIIL
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Services Offered
• Daily technical calls:- Profit from daily trading ideas based on proven technicalexpertise provided through SMS.
• Positional/Medium technical call report: Short-term ( weekly) view-based
fundamental and technical calls of select currency/commodity.
• Focused currency/commodity report:In-depth study of fundamental andtechnical aspects of select currencies.
• Daily margin report: Report on daily margins as specified by exchanges
.
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Risk Management
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Web Reports & its Usage
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End User of Reports
Clients
www.investmentz.com
BA
www.asitmehta.com
Branch
www.asitmehta.com
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Clients
Net Positions
It gives the net position of the client with expenses incurred for a specific time period.
Trade Confirmation
Trade confirmation number along with brokerage can be viewed here for specific time period.
Bills
Bills generated for a specific time period can be viewed for traded squared positions.
Ledger
Complete ledger can be viewed by client for a specific time period.
DR/CR Balance
Gives information on debit or credit in clients account.
Margin Statement
Margin utilised on current positions can be viewed.
Daily Activity Statement
Client can view information for a specific time period of all the activity done his account like quantity
bought,buy & sell rate,confirmation number etc.
Process:investmentz.com->log in->Commodity
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Business Associate/Branches
BA/Branches can check all the information discussed for clients for each client.
Pay in and Pay out instruction and status can also be checked.
Process:asitmehta.com->log in->commodity->Account Report
Web Reports
Process:asitmehta.com->log in->equity & derivatives->web reports
Various reports on clients functioning at BA's/Branches end,his performance &
information on brokerage,collection etc available
Helps BA's/Branches to understand and derive valuable information to streamline
functioning
-Contract notes & Bills
-Transaction Register
-Outstanding Position
-Portfolio Tracker
-Margin reports
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Trading Basics
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Why Asit C. Mehta?
• We believe in creating value for each individual who relies on us for his/hercommodity market needs.
• We advise our clients to trade depending on the opportunity, as opposed totrading to generate brokerage.
• We pay more importance to the quality rather than the quantity of calls wegenerate.
• We provide intra-day as well as positional calls.
• We professionally advise clients on their positions individually.
• We operate a research desk that is well-equipped to cater to your needs.
• We undertake risk management on a real-time basis.
•
We are launching an updated website with online web-based trading servicesshortly.
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Risks to be considered
Understand the concept of Leverage.
Know the amount of gain or loss that will result from any given change in thefutures price of the particular futures contract that you are trading.
If you are uncomfortable with huge losses, always put a stop loss in thecontract/commodity that you are trading.
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Get Started..
2 Photograph
Pan card xerox(Self Attested)
Address Proof(Self Attested)
Last 6 months Bank Statement(Self Attested)
Cheque in favour of Asit C Mehta Commodity Services Ltd.(For Commodity)
Cheque in favour of Asit C Mehta Investment Interrmediates Ltd.(For Currency)
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Operational Modalities
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C t t D t il
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Contact Details
For Operational Support
For Business Support