Beruflich Dokumente
Kultur Dokumente
FUTURES”
A
RESEARCH PROJECT
ON
“INVESTORS’ PERCEPTION OF
COMMODITY FUTURES”
(Conducted for Pristine Angel Broking Ltd)
Submitted by
NARESH KARNAVAT
Roll No. 912
Enrollment No: 097210592053
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FUTURES”
GUIDE CERTIFICATE
Place: Palanpur
Date:
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FUTURES”
CERTIFICATE
Dr.R.K.Shrikhande
Director Project Coordinator
Date:
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FUTURES”
DECLARATION
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FUTURES”
PREFACE
The MBA programme is specially designed professional course that enables and prepare
the students for the practical world. It offers various practical projects like the summer
internship projects that gives a chance to students to enter in industry and work with the
real professionals and help the students to understand how the industry is working and
what are the real problems and opportunities with which the industry actually deal.
It is also one of the important projects as in MBA program practical approach and
knowledge is equally important as theoretical issue. The summer report also provides an
important opportunity to students to relate their theoretical knowledge to practical issues
in real professional world.
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FUTURES”
ACKNOWLEDGEMENT
Thank you
STUDENT NAME.
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FUTURES”
EXECUTIVE SUMMARY
The questionnaire was used as data collection instrument and both open ended and close
ended type of questions were used as per the requirement. From the survey it was found
that Commodity future is a good investment opportunity prevalent in the market and
Risk can be reduced by commodity futures by using varies risk management techniques.
More details about the project are available in later part of this report.
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FUTURES”
TABLE OF CONTANTS
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FUTURES”
PAGE
TOPIC NO.
Chap-10 CONCLUSION
63-66
Chap-11 APPENDIX
➢ Questionnaire
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FUTURES”
BIBLIOGRAPHY
72
1. Organized Sector
2. Unorganized Sector
1. ORGANISED SECTOR:-
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FUTURES”
➢ Unorganized markets:-
The financial transactions, which take place outside the well-established exchanges or
without systematic and orderly structure or arrangements constitutes the
unorganized markets. They generally refer to the markets in the villages.
___________________________|__________________________
| |
Organized sector Unorganized
Sector
|
Money lender
|
__________|______________________________________
| | | | Land lords
Financial Services Institution Instrument
Market
Pawn brokers
| | |_____
Traders
Indigenous
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FUTURES”
Other
Non-intermediaries
Intermediaries
Regulatory
__________|_____________ __________|
____________
| | | | |
Capital Money market Short Medium Long term
market term term
Financial instruments constitute of securities, assets and claims. Financial securities are
classified as primary and secondary securities.
The primary securities are issued by the companies directly to the ultimate savers as
ordinary shares and debentures.
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FUTURES”
While the secondary securities are issued by the financial intermediaries to the
ultimate savers as bank deposits, insurance policies so and on.
The term financial service in a broad sense means “Mobilizing and allocating
savings”. Thus, it can also be offered as a process by which funds are mobilized
from a large number of savers and make them available to all those who are in need of it,
particularly to the corporate customers.
These guidelines cover the Indian entities that are exposed to commodity price risk.
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FUTURES”
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FUTURES”
ii. Tenure of exposure shall be limited to 6 months. Tenure beyond 6 months would
require Reserve Bank’s specific
approval.
iii. Corporate who wish to hedge commodity price exposure shall have to ensure
that there are no restrictions on import/export of the commodity hedged under
the Exim policy in force.
SEBI was setup in April 12, 1988. To start with, SEBI was set up as a non-statutory
body. It took 4 years for the government to bring about a separate legislation in the name
of securities and exchange board of India Act, 1992, conferring statutory powers over
practically all aspects of capital market operations.
Objectives of SEBI
To protect the interest of investors so that there is a steady flow of savings into the
capital market.
➢ To regulate the securities market and ensure fair practices by the issuers
of securities, so that they can raise resources at minimum cost.
➢ To provide efficient services by brokers, merchant bankers and the
other intermediaries, so that they become competitive and professional.
Functions of SEBI
Sec 11 of the SEBI act specifies the functions as follows:-
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FUTURES”
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FUTURES”
➢ Since the commodity market falls under the regulatory purview of a separate
regulatory authority viz., Forward Market Commission, to ensure effective
regulatory oversight by the Forward Market Commission, and to avoid any
possible regulatory overlap, the pre-condition for such entry by intending
participating securities brokers in the commodity futures market would be
through as separate legal entity, either subsidiary or otherwise. Such entity
should conform from time to time to the regulatory prescription of
Forward Market Commission, with reference to capital adequacy, net worth,
membership fee, margins, etc.
➢ The committee took note of the fact that the existing provisions of the
Securities Contract (Regulation)Rules 1957 forbid a person to be elected as a
member of a recognized stock exchange if he is engaged as principal on
employee in any business other than that of securities, except as a broker or
agent not involving any personal financial liability. The Committee
recommended that the above provisions in the Securities Contract
(Regulations) Rules be removed/amended suitably to facilitate
securities brokers participation/engagement in commodity futures.
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FUTURES”
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FUTURES”
To prove that commodity futures can be used as a risk reduction instrument and also as
an investment opportunity.
➢ sub-objectives of this study
1. To study the various analysis tools used to make price movement predictions.
OPERATIONAL DEFINITIONS
Short selling
Selling first is known better as ‘shorting’ or ‘short selling’. In futures trading, since one
is taking a future delivery, its just as easy to sell first and then buy later. To
offset the obligation to deliver, all one needs to do is to buy back the Contract prior to the
expiration of the Contract.
Margin
A margin refers to a good faith deposit made by the person who wants to buy or sell a
Contract in a futures exchange. It is a small percentage of the value of the
underling commodity represented by the Contract, generally in the neighborhood of
2 to 10%.
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FUTURES”
Leverage
Leverage is the ability to buy or sell $100,000 of a commodity with a $5000
security deposit, so that small price changes can result in huge profits or losses.
Maintenance margin
Maintenance margin is the amount which must be maintained in ones account
as long as the position is active.
Margin call
If the equity balance in the account falls below the maintenance margin level,
due to adverse market movement, the account holder will be issued a margin call.
Lot
A lot refers to the number of Contract that one wishes to buy or sell.
Tick
A tick refers to the minimum price fluctuation, is a function of how the prices are quoted
and set by the exchange.
Float
Float refers to the concept, when an investor who has taken a position, but does not want
to liquidate his position at close of the market.
Limit up/down
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FUTURES”
It refers to the maximum amount that the market can move above or below the previous
day’s close in a single trading session. If the price moves up it is known an ‘limit up’,
when the price moves down its is known as ‘limit down’.
RESEARCH METHODOLOGY
SOURCES OF DATA
The various sources of data are:
1. Primary Sources, which includes questionnaire, and a survey.
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Although the first recorded instance of future trading Occurred with rice in
17th century Japan, there is some evidence that there may also have been rice
futures traded in China as long as 6000 years ago.
In the United States, futures trading started in the grain markets in the middle of
the 19th century. The Chicago Board of Trade was established in1848. In the 1870’s
and 1880’s the New York coffee, cotton and produce exchanges were born. Today there
are ten commodity exchanges in the United States. The largest are the Chicago Board
of Trade the Chicago Mercantile Exchange, the New York Mercantile Exchange, New
York Commodity Exchange and the New York Coffee, Sugar and Cocoa Exchange.
Worldwide there are major futures trading exchanges in over 20 countries including
Canada, England, France, Singapore, Japan, Australia and New Zealand. The products
traded range from agricultural staples like Corn and Wheat to Red Beans and Rubber.
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FUTURES”
What is a commodity?
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FUTURES”
providing another contract at the market price. Futures contracts perform two
important functions : price discovery and hedging of price risk in a commodity.
In international bourses traders can also use financial instruments like call
and put options, not yet allowed in India. Futures contracts are useful for
the producer because he can get an idea of the price likely to prevail and thereby
help them quote a realistic price and hedge risk
Growth of commodity futures in India
Investment in India has traditionally meant property, gold and bank deposits. The
more risks taking investors choose equity trading. But commodity trading never forms a
part of conventional investment instruments. As a matter of fact Future trading in
commodities was banned in India in mid 1960’s due to excessive speculation. India
has three national level multi commodity exchanges with electronic trading and
settlement systems. The National Commodity and Derivative Exchange (NCDEX).
The Multi Commodity Exchange of India (MCX) and the National Multi Commodity
Exchange of India (NMCE) the National Board of Trading in Derivatives (NBOT),
offers trading on a national level, but is not completely online.
Commodity trading affect the economy
Commodity trading impacts the economy by making public the analysts forecasts of
future prices of the most important market goods. For example, one of the most widely
watched commodities is oil. The price of oil changes daily, which has an impact on
every good and service produced in the U.S economy. As traders take into
account all information regarding oil supply and demand, as well as geopolitical
considerations, this affects oil prices. It is these assumptions behind oil prices that
affect the economy so significantly.
Investor’s choice
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FUTURES”
The futures market in commodities offers both cash and delivery- based settlement.
Investors can choose between the two. If the buyer chooses to take delivery of
the commodity, a transferable receipt from the warehouse where goods are stored is
issued in favor of the buyer. On producing this receipt, the buyer can claim the
commodity from the warehouse. All open contracts not intended for delivery are
cash settled. While speculators and arbitrageurs generally prefer cash settlement,
commodity stock list and wholesalers go for delivery. The options to square of the
deal or to take delivery can be changed before the last date of contract expiry. In the
case of delivery- based trades, the margin rises to 20-25% of the contract value and the
seller is required to pay sales tax on the transaction.
1) Risk Transfer:-
2) Liquidity:-
3 ) Standardization:-
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FUTURES”
The exchange writes the specifications for each contract, setting standards of grading,
measurement methods of transfer, and times of delivery. By standardizing the
contracts in this manner, the exchange opens the futures market to almost anyone
willing to hedge risk. In the pits, then, the auction process is facilitated because only the
price must be negotiated.
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FUTURES”
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Operational risk:-
The risk that, errors (or fraud) may occur in carrying out operations, in placing
orders, making payments or accounting for them.
Liquidity risk:-
Although commodity futures markets are liquid mostly, in few adverse situations, a
person who has a position in the
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FUTURES”
Market risk:-
It is the risk of adverse changes in the market price of a commodity future.
Averaging:-
Averaging is a technique used when there is an existing position, and the price
moves adversely. And then at that particular price, enter into a similar new position.
Then take the average of these 2 prices. And when the price moves to that price
liquidate the position.
Switching:-
Switching is yet another risk management technique, when, there is an existing
position, and the prices move adversely and gives all indication that it will go in the same
direction for still some while. Then we have to liquidate the first position and enter a
new and opposite position at the same price.
Locking:-
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FUTURES”
Locking is yet another risk management technique, where, when there is an existing
position, and the prices move adversely and give an indication that it will move in
that direction, but it will come back to its original position. Here two processes are
involved ‘locking and ‘unlocking’. It is the process where there is an existing position,
and the price moves adversely, we ‘lock’ by entering into a new opposite position.
And then when the second price reaches a point where it will bounce back, we
‘unlock’ by liquidating the second position and book profits, and then finally when the
price reaches somewhere near the first position, liquidate the position, whereby
we can minimize the loss.
CHAP:- 6 COMPANY PROFILE
INTRODUCTION
Angel broking trust with excellence in customer relation began more than 20 year
ago. Today Angel broking has emerged as premium investment sub-broker and
wealth management house with an absolute focus on real business and commitment to
provides real value for money to all its clients. Promoted by MR.DINESH THAKKAR,
Angel started in 1987 As sub broker is a present across the country provide equity
investment solution to individual clients through multiple channel retail, phone ,
trade and internet platform. The commitment to provides world - class broking service
to the Indian investor and a customer centric work culture has led to several innovation
in the areas of the technical, quality management , HR process giving Angel unique
work culture and edge over the players in the industry. Clients value Angel of its
strong research led investment ideas superior clients service track record and exceptional
execution skill.
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FUTURES”
• BSE
• NSE
• NCDEX AND MCX COMMODITIES.
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FUTURES”
In a span of less than 20 year. Angel has emerged as a leading retail broking group with a
nation side presence through its:
• 15 Regional Hubs and 82 branches.
• 3800 + intermediaries.
• Direct team strength of 3000 +.
• 3.8 lac + customers.
Angel Research team:-
( A ) Angel broking limited is the first broking house in the county To have initiated
retail focused research since the year 2000.
( C ) One of the largest research teams in the industry for small And mid-cap.
( B ) Bottom-up approach:-
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FUTURES”
Company visits and interaction with top and second line of managers.
Estimates for future year earnings based on industry trends and Company
business plans.
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FUTURES”
STRENGTHS
➢ Financial resources.
➢ Product skill.
➢ Angel broking team is experienced in the trading.
WEAKNESSES
➢ Service
➢ Lack of skill with staff
OPPORTUNITIES
➢ Several additional client groups.
➢ Faster market growth.
➢ Entry into new market.
THREATS
➢ Other trading company.
➢ Other banking service
SERVICES
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FUTURES”
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FUTURES”
Angel offers personalized advisory services to affluent HNI investors and actively
assists them in managing their portfolio. PCG can seek guidance on specific stocks
in their portfolio and can get active advice for timely exit and fresh investments. Here
we also design customized products and services for our clients based on there risk
profile, returns need and time horizon. Our experienced research team in-depth
analysis and customized value added products and services give us an immense
advantage in assisting you to generate wealth on a longer and consistent basis.
➢ INVESTMENT ADVISORY:-
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FUTURES”
( A ) Expert Advice:-
Our expert investment advisors are based at various branches across India to
provide assistance in designing and monitoring portfolios.
Our advisors will regularly monitor your investments and will guide you to book
timely profits. They will also guide you in adopting switching techniques from one
stock to another during various market conditions. Our advisors will regularly monitor
your investments and will guide you to book timely profits. They will also guide you in
adopting switching techniques from one stock to another during various market
conditions.
( C ) De-Risking Portfolio:-
A diversified portfolio of stocks is always better than concentration in a single
stock. Based on our research, we diversify the portfolio in growth oriented sectors and
stocks to minimize the risk and optimize the returns.
➢ DEPOSITORY SERVICES:-
You must be aware that Angel Broking Ltd has started its depository services by
registering with CDSL. There are various benefits of holding your demat account
with us but the biggest advantage is that you shall be ensured of a risk free, prompt and
efficient depository process.
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FUTURES”
Since our association is slated for a long time, we are in a much better position to
know your requirement regarding your holding and transfer of securities.
No physical instructions are required for your sell obligations. We also offer to our
clients the automated pay in facility for trade done through Angel Broking Ltd /
Angel Capital and Dept Market Ltd. The transaction charges that are being levied by us
are the lowest in the industry as we believe in providing quality services at the most
affordable costs.
( A ) Easy facility :-
You can view, download and print the updated holding of your demat account along
with valuation of holding.
( B ) Easiest facility :-
You can, by using this facility, submit your own delivery instructions on the
internet without the intervention of your DP. This is in addition to all the facilities
provided under the 'Easy' facility.
We would like you to know that the state of art technology being arranged for you is
the best in the industry and all this is done so that you have convenience of
accessing information from any desired location.
➢ MUTUAL FUND:-
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FUTURES”
The Angel Mutual Fund distribution and advisory division offers you the
opportunity to diversify your investment portfolio. By offering a choice of investment
schemes from all major mutual fund providers we have taken our 100% retail-focused
philosophy a step further. Angel Mutual Fund offers options catering to investors with
varying risk-return profiles. We also help investors to choose the best mutual fund, based
on their investment needs.
EMOTIONS
( A ) SELF DISCIPLINE:-
( B ) TAKE PROFITS:-
Tremendous amounts of money can and are being made in the commodities
markets. Profits are there for the making, but the real key to trading commodities is
not making money; it is keeping it. It is not basking in the elation of success; it is
taking your profits and looking over your shoulder.
( C ) BALANCE:-
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FUTURES”
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FUTURES”
Findings
From the above table and chart, it can be seen that 80.67% of the respondents
were male, and 19.33% were female.
Interpretation
It can be concluded that mainly males invest in commodity futures.
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FUTURES”
Findings
From the above table and chart, it can be seen that 50% of the respondents were
in the age group of 20-30 years, 9.33% were in the age group of 30-40 years, and 30%
were in the age group of 40-50 years and 8.67% in the age group of 50 years and above.
Interpretation
It can be concluded that mainly the young people have invested commodity futures.
Findings
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FUTURES”
From the above table and chart, it can be seen that 46% of the respondents were
in the Graduate group, 29.33% were in the post graduate group, 23.33% were in
the Any other group and 1.33% in the higher secondary group invested in commodity
futures.
Interpretation
It can be concluded that mainly the young graduates have invested commodity futures.
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FUTURES”
Findings
From the above table and chart, it can be seen that 42.66% of the respondents
were in the Government employee group, 6% were in the Self employee group,
32% were in the Commodity futures Investor group , 14% in the Private sector
employee group invested in commodity futures and 5.33% in the Other Businesses group
invested in commodity futures
Interpretation
It can be concluded that mainly the Government employee group have invested
commodity futures.
Q- 5 INVESTERS RESPONES FROM INCOME PROFILE:-
Income Group No. of Respondents %
Below 4 lakh 62 41.33
4-10 lakh 45 30.00
10-25 lakh 38 25.33
25 lakh above 5 3.33
Total 150 100
FINDINGS
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FUTURES”
From the above table and chart, it can be seen that 41.33% of the respondents in the
income group of below Rs. 4 lakh, 30% were of the income group of Rs. 4-10 lakh and
25.33% were in the income group of Rs. 10-25 lakh
INTERPRETATION
It can be concluded that most of the people who have invested commodity futures are in
the income group of below Rs. 4 lakh
SECTION:- B
Q.1 Have you invested in commodity futures?
Particular No. of Respondents %
Findings
From the above table and chart, it can be seen that 100% of the respondents have
invested in commodity futures, and 0% have not invested in commodity futures.
Interpretation
It can be concluded that most of the respondents have invested in commodity
futures.
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FUTURES”
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FUTURES”
Particular No of Respondents %
YES 108 72
NO 42 28
Total 150 100
Findings
From the above table and chart, it can be seen that 72% of the respondents have
invested in other securities, and28% have in any other security.
Interpretation
It can be concluded that most of respondents have invested in other securities also.
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FUTURES”
Findings
It can be seen that, out of the respondents who have invested in other securities,
19.86% of them have invested in shares, 13.59% Mutual funds, 10.10% in Bonds,
17.70% have invested in bank deposits. 08.01% in real estate, 19.51% have
invested in jewellery and the rest 11.85% have invested in insurance.
Interpretation
It can be concluded that other than commodity futures, most of the respondents have
invested in shares.
Q. 4 how often do you trade in commodity future?
Particulars No. of Respondents %
Everyday 14 9.33
Once a week 77 51.33
Trade when good prices 59 39.33
Total 150 100
Findings
It can be seen that out of the investors in commodity futures, 9.33% of them trade
everyday, 51.33% of them traded once a week and 39.33% traded only when there is
good price.
Interpretation
It can be concluded that most of the investors trade in commodity futures only
when there traded once a week.
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FUTURES”
Findings
It can be seen that out of the investors in commodity futures, 18.67% of them have
invested with the objective a less risky investment, 61.33% of them invested with
the objective of diversifying hid portfolio and 16.67% of them due to the
expectation of very good returns and 3.33% have invested due to other reasons.
Interpretation
It can be concluded that most of the investors in commodity futures, have invested with
the objective of diversifying their portfolio.
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FUTURES”
Findings
It can be seen that out of the investors, 28.67% of them had invested Rs. 2 lakhs,
44% of them had invested between Rs. 2-3 lakhs, 24% had invested between Rs. 3-5
lakhs and 02.67% had invested between Rs. 5-10 lakhs.
Interpretation
It can be concluded that most of the investors had invested between Rs. 2-3 lakhs in
commodity futures.
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FUTURES”
Findings
It can be seen that out of the investors in commodity futures, 46.67% investor invest in
wheat, 46% investor invest in cotton, 4.67% investors invest in coffee, and 2.66%
investors invest in corn.
Interpretation
It can be concluded that the mostly traded commodity is wheat and coffee.
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FUTURES”
Findings
It can be seen that, 44% of the investors have invested between 20-30% of their savings
in commodity futures, 32% of them have invested between 10-20% of their savings,
12% of them have invested above 50% of their savings, 8% of them have invested
between 0-10% of their savings and 4% of them have invested between 30-50% of
their savings.
Interpretation
It can be concluded that most of the investors have invested between 20-30% of their
savings in commodity futures.
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FUTURES”
Findings
It can be seen that, 11.33% of the investors got to know about commodity futures
through their friends/family, 42.67% got to know through media and 37.33% of the
investors got to know through self-research.
Interpretations
It can be concluded that most of the investors got to know about commodity futures
through media.
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FUTURES”
Q.10 which is the risk management technique, which you use mostly?
Findings
It can be seen that out of the risk management techniques, 32% of the investors use
locking, 15.33% use switching and 6% use cut loss technique & 46.67% averaging
Interpretation
It can be concluded that is the mostly used averaging risk management technique.
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FUTURES”
Particular No of Respondents %
Very high 37 24.67
High 78 52.00
Reasonable 25 16.67
Low 10 6.67
Total 150 100
Findings
It can be seen that, 16.67% of the investors feel that the facility fee charged by their
company is reasonable, 52% of them feel that the facility fee charged by their company
is high and 24.67% of the investors feel that it is very high.
Interpretations
It can be concluded that most of the investors feel that the facility fee charged by their
company is high.
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FUTURES”
Findings
It can be seen that, 45.33% of the investors feel that they got good returns from
commodity futures trading, 47.33% of them feel that they got reasonable returns
commodity futures, 7.33% of the investors felt they got bad returns from commodity
futures.
Interpretations
It can be concluded that most of the investors got reasonable returns from commodity
futures.
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FUTURES”
Findings
It can be seen that 92.67% of the investors feel that risk can be reduced through
commodity futures, and 7.33% of the Investors feel that risk cannot be
reduced through commodity futures.
Interpretation
It can be concluded that most of the investors feel that “risk can be reduced” through
commodity futures trading.
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FUTURES”
Findings
From the above table and chart, it can be seen that 88% of the investors feel that
commodity futures is a good investment opportunity and 12% investors feel that
commodity futures is not a good investment opportunity.
Interpretation
It can be concluded that most of the investors feel that commodity futures is a
“good investment opportunity”.
p = 350/350000 =0.001
q = 1- p = 1- 0.001 = 0.999
It is assumed that there is 5% of error and 95% of level of significance,
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FUTURES”
= 1.54 = 2.
So, we can take our sample between Min. 2 to Max. 350 customers
So, I have taken my sample as that is between 2 to 350.
U can take any figure between 2 to 350........
Chi-Square Analysis:
• A fundamental problem is genetics is determining whether the experimentally
determined data fits the results expected from theory.
• The chi-square test is a “goodness of fit” test: it answers the question of how well do
experimental data fit expectations.
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FUTURES”
• The “Χ” is the Greek letter chi; the “∑” is a sigma; it means to sum the following
terms for all phenotypes. “obs” is the number of individuals of the given phenotype
observed; “exp” is the number of that phenotype expected from the null hypothesis.
• Note that you must use the number of individuals, the counts, and NOT proportions,
ratios, or frequencies.
(obs − exp)2
Χ2 = ∑
exp
Critical values for chi-square are found on tables, sorted by degrees of freedom and
probability levels. Be sure to use p = 0.05.
If your calculated chi-square value is greater than the critical value (Tabulated Value)
from the table, you “reject the null hypothesis”.
If your chi-square value is less than the critical value, you “fail to reject” the null
hypothesis (that is, you accept that your genetic theory about the expected ratio is
correct).
A critical factor in using the chi-square test is the “degrees of freedom”, which is
essentially the number of independent random variables involved.( If CV > TV,
Reject H0 & Accept H1, Vice- versa).
Investment
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FUTURES”
Belo 5 to Abov
2 to 3 3 to 5
O Particulars w2 10 e 10 Total
Lakh Lakh
c Lakh Lakh Lakh
c Government Employee 23 25 15 1 0 64
u Self Employed 4 4 1 0 0 9
p
Commodity Future
a 14 19 13 2 0 48
t Investor
i Private sector
2 13 6 0 0 21
o Employee
n Other Businessmen 0 5 1 1 1 8
Total 43 66 36 4 1 150
Frequency
χ 2 = Σ Σ (fo-fe)2 NO. Expected χ 2
(fe)
fe 11 18.35 1.18
df = (r-1) (c-1) 12 28.16 0.355
13 15.36 0.008
r = No. of rows 14 1.71 0.293
15 0.43 0.427
c = No. of columns
21 2.58 0.782
22 3.96 0
23 2.16 0.623
24 0.24 0.24
Frequency Expected
25 0.06 0.06
Fe = (ni*nj) 64*43 = 18.35 31 13.76 0.004
N 150 32 21.12 0.213
33 11.52 0.19
34 1.28 0.405
35 0.32 0.32
41 6.02 2.684
2 = (fo-fe)2 (23-18.35)2 = 1.18 42 9.24 1.53
fe 18.35 43 5.04 0.183
44 0.56 0.56
45 0.14 0.14
51 2.29 2.293
52 3.52 0.622
53 1.92 0.441
54 0.21 2.901
55 0.05 16.803
Tot
al 150 33.257
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FUTURES”
Interpretation:-
The observed value of Chi-Sq, 33.25, is greater than the tabulated value, 26.39.
This concludes that the investment decision is more dependent on Occupation and this
information will help out to company to for market decision.
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FUTURES”
P=.30
0.5 Area
1.645 4.09 Area
Non-0.5
Rejection rejection
443.94
STEP-2
Assumed if error rate is 5% then α=0.05
STEP-3
0.5-0.05=0.45
∴ Z value is: 1.645 (0.5-0.05=0.45)
STEP-4
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FUTURES”
∴ Z= P^-Ppq/n
= 4.0978
The Observed Value 4.0978 is greater than tabulated value 1.645. Therefore the null
hypothesis is rejected. Therefore it concludes that > 30% of Investors believe good return
from commodity future.
This test is used validly only when there is sample size is large enough such that
n*p> 5 and n*q> 5.
STEP-1
H0:P= 85% investor believe that commodity future can reduce risk
P=0.85
0.5 Area
1.645 2.63 Area
Non-0.5
Rejection rejection
443.94
STEP-2
Assumed if error rate is 5% then α=0.05
STEP-3
0.5-0.05=0.45
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FUTURES”
STEP-4
In this question the sample size is n=150 and p=0.85
Therefore n*p=150*0.85 which is greater than 5.
∴ Z= P^-Ppq/n
= 2.63
The Observed Value 2.63 is more than tabulated value 1.645. Therefore the null
hypothesis is rejected. Therefore it concludes that > 85% of Investors believe that risk
can be reduced by commodity future.
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FUTURES”
The prime objective of this study is to attempt to prove that commodity futures can be
efficiently used to reduce risks of a person who is directly involved with the trading
of the commodity. Another objective was to prove that it was a sound investment
opportunity.
In order to prove both the objectives, a few sub objectives were earmarked and analyzed.
The first being the trading system of commodity futures. The trading system included
the exchange where the trade takes place the clearinghouse which ensures that the
money is transferred to the right person at the right time. The trading system also
includes trading and intermediary participants, who ensure the correct price discovery.
Thus the trading system is one of the factors which reduce the risk in commodity futures.
Commodity futures trading included the intermediary and trading participants likes
brokers who make use of the various technical analysis tools in order to make
predictions of the price movement’s they also take into consideration the fundamental
analysis. Thus with the help of the various analysis tools, efficient price predictions can
be made, where the investors in commodity futures can benefit from the price
movements. There was also an objective to analyze the growth of commodity future.
From the analysis, it can be Concluded that, commodity futures trading is experiencing
tremendous growth. This can be emphasized by the fact that there has been an increasing
trend in the volume traded in most of the commodities. Thus, commodity futures are a
growing market. To find out the investors perception towards commodity futures,
questionnaire survey was conducted, where in various parameters were taken into
consideration. From the questionnaire, it could be concluded that most of the
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FUTURES”
respondents felt that risk could be reduced through commodity futures and
that it was a sound investment opportunity.
➢ Diversify:-
Portfolio risk is reduced through diversification. Don’t bet everything on one trade.
Diversify your risk exposure by trading no more than 1% to 5% of your capital on any
one position. (Contracts on different maturities of the same commodity count as
one position.) To be effective diversification must involve commodities that are
not highly correlated (that is, that do not move in the same direction at the same time).
High positive correlation reduces the benefits of diversification. Predetermined
stop orders limit your risk exposure and will cut your losses in fast moving markets.
Adopt a rigid stop-loss rule (for example, get out of a trade quickly if it loses 5-7%)
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FUTURES”
➢ Don't overtrade:-
Reduce your risk exposure by cutting down on the number of trades you make and
keeping your bets small. Be selective about the risks you take. Restrict your trades to the
ones that are the most attractive. This forces you to do your homework and reduces
impulsive and emotional trades. Because there will be fewer trades, you will have to be
much more patient.
✔ Acting quickly to reduce risk exposure if the market moves against you
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FUTURES”
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FUTURES”
ANNEXURE
ANGEL BROKING LTD
KNOW YOUR CLIENT (KYC)
1. ARE YOU AWARE ABOUT THE FOLLOWING SERVICES
OF ANGEL BROKING LTD?
SR. PRODUCT NOT AT PARTIAL FULL
NO ALL
1. NSE, BSE, FO
2. DEMAT ACCOUNT
3. MCX, NCDX
4. PMS
5. INSURANCE
6. MUTUAL FANDS
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FUTURES”
CLINT NAME:-________________
CLINT SIGNATURE:-___________
QUESTIONNAIRE
PART – A
(PLEASE TICK WHICHEVER IS APPLICABLE)
1) Name:-
__________________________________
2) Sex:
Male:-
Female:-
3) Age:
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FUTURES”
5) Occupation:
Government employee:-
Self-employee:-
Commodity futures investor:-
Private sector employee:-
Others Businessman:-
6) Income:
Below 400000:-
4,00,001 – 10,00,000:-
10,00,001 – 25,00,000:-
Above 25,00,000:
PART – B
1) Have you invested in commodity futures?
Yes:-
No:-
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY
FUTURES”
Real estate:-
Jewellery:-
Others:
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FUTURES”
2,00,000:-
2,00,000-3,00,000:-
3,00,000-5,00,000:-
5,00,000-10,00,000:-
Above 10,00,000:-
8) Which commodities have you traded in the most?
Wheat:-
cotton:-
Coffee:-
Corn:-
9) What percentage of savings have you invested in
commodity futures?
0-10% :-
10-20%:-
20-30%:-
30-50%:-
50% and above:-
10) How did you get to know about commodity futures trading?
Friends/family:-
Self-research:-
Media:-
Others:-
Switching:-
Averaging:-
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FUTURES”
Locking:-
Cut loss:-
12) What do you think about the felicitation fee charged by your
company?
Very high:-
High:-
Reasonable:-
Low:-
Yes:-
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FUTURES”
BIBLIOGRAPHY
BOOKS:-
WEBSITES:-
• www.rbi.org
• www.sebi.com
• www.barchart.com
• www.angeltraed.com
• www.angelcommodity.com
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FUTURES”
79