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: Prof. Rajesh Bajaj

Submitted by: 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 gratitudes 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 1 2 3 4 Topic Certificate Summer Training Appraisal Acknowledgement Executive Summary Chapter I: Introduction Chapter II: Review of Literature Chapter III: Research Methodology Chapter IV: Data Reduction, Presentation & Analysis Chapter V: Data Interpretation Chapter VI: Summary & Conclusions
References/ Bibliography

Page No -

4 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 investors preference from commodity market. To identify the investors 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 investors 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

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.

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 traders 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 whats 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 demutualised 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 MultiCommodity 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 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. 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 investors 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 Investors 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 AddressRegistered 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 Companys Vision"To be the leading emerging markets financial services group driven by innovation, delivering superior value for all stakeholders globally"

Companys 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) b) c) d) High Liquidity Extended trading hours - 9 am to 5 pm Opportunities to reap benefits owing to a highly dynamic market Small lot size of only US $1000 with low exchange specified margins

Currency Futures is best suited for a) SMEs / Individuals involved in Imports/Exports b) Corporate/ Institutions involved in Imports/Exports and anybody else who has foreign currency exposure 1.4.5 Size of the Organizationa) More than 3000 employees are working in Religare commodities b) 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
General Public

Other Investors

Promoters Institutional Investors Other Investors General Public

71.77% 2.63% 9.77% 15.83%

Institutional Investors Promoters

As on : Face Value No. Of Shares PROMOTER HOLDING Foreign Promoters Indian Promoters Sub Total 4,400,050 102,797,124 107,197,174 NON PROMOTER HOLDING Institutional Investors Mutual Funds and UTI Banks Fin. Inst. and Insurance FIIs Sub Total 0 1,608,756 2,324,659 3,933,415 Other Investors Private Corporate Bodies NRIs/OCBs/Foreign Others Directors Others 2,585,277 10,151,127 1,619,255 231,007

30-Jun-2012 10 % Holding

2.95 68.82 71.77

0.00 1.08 1.56 2.63

1.73 6.80 1.08 0.15

Sub Total General Public GRAND TOTAL

14,586,666 23,651,298 149,368,553

9.77 15.83 100.00

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 Jaffes (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): 13871406. 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 respondents 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 dx dy ( dx) ( dy) r = -----------------------------------------Ndx - ( dx) N dy - ( dy) 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 Where, W- No. of Respondents favoring in the opinion X- Value of the score to the option. = ( XW/ W)

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 1 2 3 4 Age group Below 25 yrs 25-50 yrs 50-75 yrs Above75 yrs Total No. of Respondents 19 41 52 8 120 No. of Respondents in (%) 15.8 34.2 43.3 6.7 100

Chart No 5.1: Age Group of the Respondents

Age group of Respondents

7% 16% Below 25 yrs 25-50 yrs 43% 50-75 yrs 34% Above75 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 1 2 3 4 Total Occupation Business Profession Employed Others No. of Respondents 33 46 27 14 120 No. of Respondents in (%) 27.5 38.33 22.5 11.66 100

Chart No: 5.2 The chart showing occupation of the Respondents

Occupations of Respondents
12% 27% Business Prefession 23% Employed Others

38%

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 No. of Respondents in (%) 76.7 23.3 100

S.No 1 2

Occupation Male Female Total

No. of Respondents 92 28 120

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

Gender of Respondents
100 90 80 70 60 50 40 30 20 10 0 Male Female Gender of Respondents 92 28 Percentage 76.7 23.3

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 Educational Qualifications Up to 12th UG PG Others Total

S.No 1 2 3 4

No. of Respondents 20 48 38 14 120

No. of Respondents in (%) 16.7 40 31.7 11.7 100

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

Educational Qualifications of Respondents

11% 17% Up to 12th UG 32% 40% PG Others

Inference: From the above table, it is shows that 16.7% of the respondents are in the category of up to 12th, 40% of the respondents Educational qualifications are UG, 31.7% of the respondents are belongs to PG and 11.7% of the respondents 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 1 2 3 4 Annual Income Below 2 Lakhs 2 Lakhs -4 Lakhs 4 Lakhs-6 Lakhs Above 6 Lakhs Total No. of Respondents 40 28 23 29 120 No.of Respondents in (%) 33.3 23.3 19.2 24.2 100

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

Annual Income of Respondents

24% 34% Below 2 Lakes 2 lakes -4 lakes 4 lakes-6 lakes 19% 23% Above 6 Lakes

Inference: From the above table, it is inferred that 33% of the respondents Annual income is Below 2 Lakhs, 23.3% of the respondents Annual income is 2 Lakhs - 4 Lakhs, 19.2% of the respondents Annual income is 4 laks-6 lakhs and 24.2% of the respondents are belongs to above 6 Lakhs. Hence, most of the respondents annual income falls in below 2 lakhs.

Table No.5.6: The table showing Investment Objectives of the Respondents S.No 1 2 3 4 Investment Objectives High income Reasonable income for safety For Retirement welfare Tax benefit Total No. of Respondents 77 35 8 0 120 No.of Respondents in (%) 64.1 29.1 6.7 0 100

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

Investment Objectives of Respondents

0% 7% High income 29% Reasonable income for safety For retirement welfare 64% Tax benefit

Inference: From the above table, it is identified that 64.16% of the respondents investment objective is to earn high Income, 29.16% of the respondents aim is as reasonable income for safety. 6.66% of the respondents objective is to for retirement benefit and 0% of the respondents 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 1 2 3 4 Investment portion Below 25% 25% -50% 50%-75% Above 75% Total No. of Respondents 37 43 35 5 120 No. of Respondents in (%) 30.83 35.83 29.16 4.16 100

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

Investment portion of the Respondents income

4% 31% 29%

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

36%

Inference: From the above table, it is find that 30.83% of the respondents investment portion of income is below 25%. 35.83% of the respondents investment portion of income is between 25%-50%, 29.16% of the respondents investment portion of income is between 50%-75%, and 4.16% of the respondents investment portion of income is above 4%. Hence, majority of the respondents investment portion are in between 25 to 50%.

Table No.5.8: The table showing Risk taking capacity of the Respondents S.No 1 2 3 4 5 Risk taking capacity Very high High Medium Low Very low Total No. of Respondents 20 24 26 26 24 120 No. of Respondents in (%) 16.66 20 21.66 21.66 20 100

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

Risk taking capacity of the Respondents

20%

16%

Very high High Medium 20% Low Very low

22%

22%

Inference: From the above table, it is clearly shows that 16.67% of the respondents risk taking capacity is very high, 20% of the respondents risk taking capacity is high, 21.66% of the respondents risk taking capacity is Medium, 21.66% of the respondents risk taking capacity is low and 20% of the respondents 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 No. of Respondents 59 33 17 11 120 No. of Respondents in (%) 49.16 27.5 14.16 9.16 100

S.No 1 2 3 4

Current Investment Below 1 lakhs 1 Lakhs -2 Lakhs 2 Lakhs -3 Lakhs Above 3 Lakhs Total

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

Current Investment of the Respondents

9% 14% 49% Below 1 laks 1 lakes -2 lakes 2 lakes -3 lakes Above 3 lakes 28%

Inference: From the above table, it is reveals that 49.16% of the respondents current investment amount is below 1 Lakhs.27.5% of the respondents current investment amount is between 1 Lakhs -2 Lakhs, 14.16% of the respondents current investment amount is between 2 Lakhs -3 Lakhs, and 9.16% of the respondents 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 No. of Respondents 59 21 9 31 120

S.No 1 2 3 4

Investment advice Friends Family Consultants others Total

No. of Respondents in (%) 49.16 17.5 7.5 25.83 100

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

Investment advice of the Respondents

26% 49% 8% 17%

Friends Family Consultants others

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 1 2 3 4 Investment avenues Share Mutual funds Commodity market Other savings Total No. of Respondents 52 26 32 10 120 No. of Respondents in (%) 43.33 21.66 26.66 8.33 100

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

Various Investment preferences of the Respondents

8%

27%

43%

Share Mutual funds Commodity market Other savings

22%

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 Source of know about the S.No commodity market of the Respondents 1 2 3 4 Friends Dealers Mass media Officials of investment org. Total No. of Respondents 59 5 25 23 120 No. of Respondents in (%) 49.16 4.166 20.83 19.16 100

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

No. of Respondents to know about Commodity Market Through

21% Friends Dealers 53% 22% Mass media Officials of investment organization

4%

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, its 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.No 1 2 3 4 Experience in commodity market Below 1 year 1-2 years 2-3 ears More than 3 years Total No. of Respondents 18 42 23 37 120 No. of Respondents in (%) 15 35 19.16 30.83 100

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

Experience of the Respondents in commodity Trading

45 40 35 30 25 20 15 10 5 0 Below 1 year 1-2 years 2-3 ears More than 3 years

No. of Respondents Percentage

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, Its 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 1 2 3 4 5 6

Frequency of Trading Daily Weekly Monthly Every season Occasionally Rarely Total

No. of Respondents 103 7 3 2 3 2 120

No. of Respondents in (%) 85.83 5.83 2.5 1.66 2.5 1.66 100

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

Frequency of Trading in commodity market of the respondents

200 150 100 50 0 Percentage No. of Respondents Daily 103 Weekly 7 Monthly 2.5 3 Every season Occasionally 1.666666667 2 2.5 3 Rarely 1.666666667 2

85.83333333 5.833333333

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 respondents 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 respondents trading frequency is in occasional basis, and 1.66% of the respondents are trading in commodity market in rarely. Hence, its 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.No 1 2 3 4 5

Experience in commodity market Very high High Medium low Very low Total

No. of Respondents 70 30 10 7 3 120

No.of Respondents in (%) 58.33 25 8.33 5.83 2.5 100

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

Awareness level of commodity market regulations and its circular

140 120 100 80 60 40 20 0 Percentage

Very high 58.33333333 70

High 25 30

Medium

low

Very low 2.5 3

8.333333333.833333333 5 10 7

No. of Respondents

Inference: From the above table, it is inferred that 58.33% of the respondents awareness level of markets regulations and its circulars is very high, 25% of the respondents awareness level falls in high, 8.33% of the respondents are moderately aware about markets regulations and its circulars, 5.83% of the respondents are having low level awareness of markets regulations and its circulars, and 2.5% of the respondents are not aware of markets regulations and its circulars. Hence, its concluded that out of the sample most of the respondents awareness level falls in the very high category.

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

S.No 1 2 3 4

Reason for Choosing Commodity High return Moderate return Safe return Low Margin Total

No. of Respondents 82 4 4 30 120

No. of Respondents in (%) 68.33 3.33 3.33 25 100

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

Reason for Choosing Commodity Market of the Respondents

25% High return 3% 4% 68% Moderate return Safe return Low 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 respondents 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 respondents reason for choosing commodity market falls in low Margin. Hence, Its 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 Plantation Products: Rubber, Spices: Pepper, Turmeric, Jeera, chilli, coriander Pulses: Chana Fibres: V-797 kapas , shankar kapas Cereals: Wheat, Barley, Oil and Oil seeds: Castor seeds, Others: Guar Seeds, Guar Gum, Metals: Steel, Copper, Zinc, Energy: Crude Oil, Thermal Coal, Precious Metals: Gold, Gold (100 gms), Gold International, Silver, Silver (5kg), Silver International, Platinum Others: CER, Polyvinyl Chloride

Very High 17

% 14.16

Hig h 15

% 12.5

Mediu m 14

% 11.66

low 34

% 28.33

very Low 40

% 33.33

17

14.16

20

16.66

18

15

32

26.66

33

27.5

18 26

15 21.66

20 12

16.66 10

23 27

19.16 22.5

44 30

36.66 25

15 25

12.5 20.83

23 22 15

19.16 18.33 12.5

15 15 14

12.5 12.5 11.66

25 21 22

20.83 17.5 18.33

31 32 33

25.83 26.66 27.5

26 30 36

21.66 25 30

50

41.66

32

26.66

11

9.166

16

13.33

11

9.166

52

43.33

20

16.66

15

12.5

20

16.66

13

10.83

60

50

19

15.83

11

9.16

15

12.5

15

12.5

1.66

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 its 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 respondents 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.No 1 2 3 4

Specialty of commodity market Price hedging Regulated marketing Low risk Quality products Total

No. of Respondents 51 39 20 10 120

No. of Respondents in (%) 42.5 32.5 16.66 8.33 100

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

Speciality of Commodity Market

8% price hedging 42% 33% low risk regulated marketing quality products 17%

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 respondents 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 its 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. Level of acceptance of luring advertisement, rumors etc Very high High Medium Low Very low Total No. of Respondents 81 25 12 1 1 120 No. of Respondents in (%) 67.5 20.83 10 0.83 0.83 100

S.No 1 2 3 4 5

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

Level of acceptance of the respondents about luring advertisement, rumors etc

1%1% 10% Very high 21% High Medium Low 67% Very low

Inference: From the above table, it is found that 67.5% of the respondents 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 respondents 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, Its 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.No 1 2 3 4

Respondents recommendation to others Definitely Probably Not sure Never Total

No. of Respondents 75 33 12 0 120

No. of Respondents in (%) 62.5 27.5 10 0 100

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

Respondents recommendation of others entering into the commodity market

0% 10% Definitely Probably

28% 62%

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 its 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) Metal (Y) 17 50 20 32 18 11 32 16 33 11

Step 1: Calculation of Correlation N dx dy ( dx) ( dy) r = -----------------------------------------Ndx - ( dx) N dy - ( dy) Step2: Table No.5.22: Correlation between Spices and metals X 17 20 18 32 33 120 (X-24) dx -7 -4 -6 8 9 0 dx 49 16 36 64 81 246 Y 50 32 11 16 11 120 (Y-25) dy 25 7 -14 -9 -14 -5 dy 625 49 196 81 196 1147 dx dy -175 -28 84 -72 -126 -317

r Inference:

-0.5980

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) precious metals (Y) 20 60 24 19 26 11 26 15 24 15

Step 1: Calculation of Correlation N dx dy ( dx) ( dy) r = -----------------------------------------Ndx - ( dx) N dy - ( dy) Step2: Table No.5.24: Calculation of Correlation X 20 24 26 26 24 120 (X-26) dx -6 -2 0 0 -2 -10 dx 36 4 0 0 4 44 Y 60 19 11 15 15 120 (Y-30) dy 30 -11 -19 -15 -15 -30 dy 900 121 361 225 225 1832 dx dy -180 22 0 0 30 -128

r Inference:

-0.94441

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 respondents preference of commodity market rating Very High 17 85 17 85 18 90 26 130 23 115 22 110 15 75 50 250 52 260 very Low 40 40 33 33 15 15 25 25 26 26 30 30 36 36 11 11 13 13 Rankin g

Types of commodities Plantation Products: Rubber, Score Spices: Pepper, Turmeric, Jeera,chilli, coriander Score Pulses: Chana Score Fibres: V-797 kapas , shankar kapas Score Cereals: Wheat, Barley, Score Oil and Oil seeds: Castor seeds, Score Others: Guar Seeds, Guar Gum, Score Metals: Steel, Copper, Zinc, Score Energy: Crude Oil, Thermal Coal, Score

High

Medium

low

Total

15 60 20 80 20 80 12 48 15 60 15 60 14 56 32 128 20 80

14 42 18 54 23 69 27 81 25 75 21 63 22 66 11 33 15 45

34 68 32 64 44 88 30 60 31 62 32 64 33 66 16 32 20 40

120 9 295 120 7 316 120 4 342 120 3 344 120 5 338 120 6 327 120 8 299 120 1 454 120 2 438

Precious Metals: Gold, Gold (100 gms), Gold International, Silver, Silver (5kg), Silver International, Platinum Score Others: CER, Polyvinyl Chloride Score

60

19

11

15

15

120 1

300 2 10

76 0 0

33 15 45

30 40 80

15 63 63

454 120 10 198

Inference: From the above table by the weighted average method, its observed that Precious Metals: Gold, Gold (100 gms), Gold International, Silver, Silver (5kg), Silver International, Platinum commodities have 1 rank of investors 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 respondents qualification is below schooling, 40% of the respondents qualification is only under graduates, 31.7% of the respondents qualification is post graduates and 11.7 % of the respondents 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 respondents 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 respondents current investment is below 1 lakh, 27.5% of the respondents 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 respondents 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 respondents higher preference of their investment avenues is shares, 21.7% of the respondents investment preference is mutual funds, 26.7% of the respondents investment preference is commodity markets and 8.3 % of the respondents 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 its 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, maizefeed/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, its observed that Precious Metals: Gold, Gold (100gms), Gold International, Silver, Silver (5kg), Silver International, Platinum commodities have 1st rank of investors 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. 2.

en.wikipedia.org/wiki/Commodity_market www.commoditiesstreetjournal.com/

3. www.religare.com 4. www.religarecommodities.com 5. 6. 7.
www.mcxindia.com/ futures.tradingcharts.com/ www.indiainfoline.com Markets

8. International financial management - P.G APTE

APPENDICES ANNEXURE-I
Questionnaire Please read the following before you complete the questionnaire. 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