angel COMMODITIES PVT.LTD.

A Project Report On Study of Indian Commodity Market

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Objectives
To

learn about commodity market and need of it. know about investment pattern, participation, perception and awareness of retail investors in commodities through survey.

To

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About Angel Broking

Vision: To provide best value for money to investors through innovative products, trading/investments strategies, state of the art technology and personalized service. Activities of company Advice based broking in equities, commodities, derivatives Research & advisory products in equities/commodities/derivatives E-Broking services Wealth management services (PMS) Depository services Value added back office services
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About Angel Broking

31 Regional Hubs 148 branch offices 6000+Employees Over 7.4 lakhs Customers 6500+RegistareSub-brokeres/Remises/Authorized Persons 100+Reserch Team Member Highest no of Sub-brokers on NSE & BSE

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Introduction of Commodity Market

What is Commodity? Any product that can be used for commerce or an article of commerce which is traded on an authorized commodity exchange is known as commodity.

What is Commodity market? Commodity market is a place where trading in commodities takes place. Markets where raw or primary products are exchanged.

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List of Traded Commodity

Agricultural Products:- Corn, Oats, Rough Rice, Jeera. Soybeans, Rapeseed, Soybean Oil, Wheat, Coffee etc Livestock and Meat:- Lean Hogs, Frozen Pork Bellies, Live Cattle, Feeder Cattle. Energy:- WTI Crude Oil, Brent Crude, Ethanol, Natural Gas, Heating Oil, Gulf Coast Gasoline etc Precious Metal:- Gold, Platinum, Palladium, Silver. Industrial Metals:- Copper, Lead, Zinc, Tin, Aluminum, Aluminums alloy, Nickel, Recycled steel, Iron etc.

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India and The Commodity Market

The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875 Cotton, derivatives trading started in oilseed in Bombay (1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in Bombay (1920). The parliament passed the Forward Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the India. After Liberalization and Globalization in 1990, the Government set up a committee (1993) to examine 4/5/2012 7 the role of futures trading. Ahmedabad Institute of Technology

Introduction to Commodity Derivatives

Derivatives

are financial contracts, which derive their value from an underlying asset. E.g. When we say an Infosys future, these will carry a value only because of the value of Infosys markets
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Derivative
Financial

Derivatives Commodity Derivatives 4/5/2012

Participants In Commodity Derivatives

Hedgers-They face risk associated with

the price of an asset. They use the futures market to reduce or eliminate this risk. 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.

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Continued

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Continued
Speculators

They are participants who wish to bet on future movements in the price of an asset.

Arbitragers

They work at making profits by taking advantage of discrepancy between prices of the same product across different markets.
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Commodity Exchanges In India

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Commodity Exchanges In India

National Level Multi Commodity Exchanges
1.

National Commodity & Derivatives Exchange (NCDEX) Multi Commodity Exchange (MCX) National Multi Commodities Exchange of India Ltd. (NMCEIL)
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2.

3.

Research Objective

To know about investment pattern, participation, perception and awareness of retail investors in commodities through survey. To find out the reasons why people are not trading into commodity markets. To understand the factors which are affecting to the commodity markets the most?

Which commodities are mainly traded by the people?

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Research Methodology

Type of Research: Descriptive Research Research Instrument: Questionnaire Sample Size: 100 samples Sampling Method: Convenience sampling Limitations: * Time constraint * Cost of the survey * Bias from the side of interviewee
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Data Analysis

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1. Where are you investing your money?

Investment Option Bank Deposits(FD) NSC/PPF(Govt Sec) Mutual Funds Insurance Schemes Share Market Commodities Market Others Value

38 40 50 58 92 24 6 308

Analysis: Highest 30% of the people are investing into the share market. Only 2% of the people are falls into the others options which consists gold.
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2. What are your criteria for investment in share market?

Investment Criteria Intraday Trading Short term investment Medium term investment Long term investment Others Value 36

50
14 46 6 152

Analysis: More than 50% of the people are intraday trader and short term investors. So it will be opportunity for the commodity markets to convert them to the commodity trading by proper awareness.

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3. Are you aware about the commodity markets?

Options Yes No Value 56 44 100

Analysis: Nearly 50% of the people are unaware about the commodity markets. So commodity exchanges & brokers have to take some corrective steps to create the awareness into the general public.
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4. From where you are getting the information about the commodity markets?
Options News paper News channel Through broker Family/friend Other Value 18 30 24 6 16 94

Analysis: News channel is the most important source of information about the commodity markets. Here others consisting magazines and some people are knowing because of their business line.

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5. Are you interested into awareness programs (seminars)?

Options Yes No Value 24 20 44
45% 55% Yes No

No of people intrested in awareness programme

Analysis: More than 50% of the people are interested into the awareness programs.

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6. Are you trading into the commodity markets?

Options Yes No Value 22 78 100

Analysis: Only 22% of the people are trading into the commodity markets so there is having a large market share to cover by creating the proper awareness.

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7. Why are you not trading into the commodity market?

Options Lack of understanding Lack of guidance from brokers No Option for Warehousing problem Influence of macroeconomic Big losses Big lots(high margin) Other Value 44

Reason for not trading into commodity Lack of understanding market

Lack of guidance from brokers
No option for long term investment Warehousing problem

12
6

31%
2 2 14

34%

Influence of macro economic factors(int factors) Big losses 5% Big lots(high margin)
11%

6 38 124

10% 2%2% 5%

Other

Analysis: 34% of the people are not trading because of lack of understanding. While 31% of the people are not trading because they are not having the time and interest.
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8. In which commodity you will mainly trade?

Commodity Gold/Silver/Cop per Any Agriculture commodity 8 Value 22

Crude oil
Other

12
0 42

Analysis: More than 50% of the people are trading into the metals like gold/silver & copper. Only 19% of the people are trading into any agriculture commodities which are very much lesser than the metals. So we can say that by creating more awareness to the farmers commodity exchanges can get better turnover into agri commodities.

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9. What is your purpose for trading into the commodity markets?

Options Speculation Hedging for 8 Value 18

physical goods Investment(Deliv ery purpose) Arbitrage Other

0 6 8 40

Analysis: 45% of the people are just doing speculation into the commodity markets. O% people are taking the delivery of the commodity.

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10. Which factors are affecting to the commodity markets the most?
Options Monsoon Crop Harvesting Political Demand-supply scenario Spot prices Other Value 16 2 12 24 4 30 88

Analysis: 34% of the people who are falling within the others criteria are believe that commodity market is just speculation so no factors are affecting to it is completely depend on the operators. Only 2% and 5% of the people are believe crop harvesting and spot prices as important factor for that. 27% of people believe demand-supply scenario can be a important factor.
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11. From which broker you will dealing for a commodity trading?
Options Angel Broking Kotak Commodities India Infoline India Bulls Reliance Money Kunwerji Commodities Other Value 7 0 2 0 3 4 6

Analysis: The charts shows that Angel is having nearly 30% share in total commodity market segment in Ahmadabad While other consisting Monark Projects, Parko Commodities

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12. What are the reasons for dealing with particular broker?
Options Personalized ser. Value 8
People criteria for dealing with particular broker
18% 0% 5% 0% 18% Personalized services Risk Management Services Less brokerage and Margin 9% Better research call (Tips) Brand name Online Back office services 27%
Door step services

R M services
Less brokerage a Better research call (Tips) Brand name Online Back office services Door step services Other

4
10

12 0
2 0 8

23%

Other

Analysis: 27% people are dealing with particular broker because they provide better research call (Tips) 0% of the people needs brand name of their broker..
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13. Do you feel that in last couple of years prices of general commodities have gone up due to commodity speculations?
Options Yes No Value 48 8 56

Analysis: 86% of the people are believe that price of general commodities have gone up due to commodity speculations.

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Findings

Findings of this Project show that only 8% of the people are investing money in the commodity market at this stage even though 56% respondents are aware about the commodity market. Basically news channel is the main source for awareness regarding commodity markets in the respondents. The main reason for not trading in the commodity market is the lack of understanding and other major reason is that lack of time and interest and also some bad experience in previous investment.

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Continued

Out those who invest in the commodity market, more than half of them invest in the gold, silver and copper. When asked to the people regarding the factors affecting commodity market, 34% respondents reply that speculation is the Broker where they deal. Respondents reply regarding the broker where they deal show that 32% of them deal through angel broking. Most of the people think that speculation is responsible for increase in the general price levels of the commodities
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Recommendations

Nearly 50% of the population is unaware about the commodity markets so it is recommended to commodity exchanges that they have to take some serious actions for creating awareness about these markets to the general public. They can create more and more awareness by arranging seminars targeting general publics and people who are more risk takers into the share markets. News channel is also one of the better sources for creating awareness.

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Continued

In our survey nobody take delivery of the commodities because they are facing the problem of warehousing so commodity exchanges have to take some steps for solving the warehousing problem. Only 20% of the peoples are hedgers into these markets so exchanges can get better turnover by attracting other people who are dealing such commodities. Very less no of the people are trading into any agriculture commodities we can say that by creating more awareness to the farmers commodity exchanges can get better turnover into agriculture commodities.
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Suggestions to Angel Commodities

Arrange

seminars for existing equity clients

Aggressive

marketing into this segment through the trained executives

Improve
Start

research work

SMS services

learn

certain risk management techniques like arbitrage, hedging to their clients.

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Conclusion
Awareness

need be increased in the general public about the commodity market if it is to grow at a faster rate than prevailing. speculation is curbed then and then only we can make the general people think positively about commodity market because normal perception about commodity market is that it is satta market i.e. speculation market.
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If

Thank You

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