Summer Internship Project

Analysis of Movement of Gold, Silver and Crude Oil Prices and their correlation with the Sensex

Submitted in partial fulfillment of PGDM program 2010-12

Submitted by

Nadeem Khan 18/089

Company Mentor

Faculty Mentor

Mr. Manoj Kumar Asst. Manager, Sharekhan Ltd.

Mr. Kamal Kishore Professor

Apeejay School of Management New Delhi July 2011

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CERTIFICATE This is to certify that the project work done on Analysis of Movement of Gold, Silver and Crude Oil Prices and their correlation with Sensex Submitted to Apeejay School of Management, Dwarka by Nadeem Khan in partial fulfillment of the requirement for the award of PG Diploma in Business Management, is a bona-fide work carried out by him/her under my supervision and guidance. This work has not been submitted anywhere else for any other degree/diploma. The original work was carried out during 2 May 2011 to 24 th June 2011 in ShareKhan Limited.

Date:

Seal/Stamp of the Organization

Mr. Kamal Kishore Address:

Acknowledgement

Even the mightiest of warriors and the best of sportsmen need a mentor - a guiding light. For me while compiling this project report, the barriers were many, but I knew where to look for that light, that inspiration. Professor Kamal Kishore, my faculty mentor, helped me right from the selecting the topic to finishing it and pointing out the fallacies, and hence making it near perfect. I would also like to show my gratitude to Mr. Manoj Kumar, my corporate mentor, who not only helped me in making this report, but also kept my morale high during the course of the complete internship period. My special thanks to Mr. Umash Kumar Sahu, and Mr. Vijay Chauhan who constantly helped me and were there to lend a hand whenever I lost my balance. My special thanks to Dr. Deepankar Chakerbarti, Dean, Apeejay School of Management, and Dr. Alok Saklani, Director, Apeejay School of Management who have always been a teacher, a guide and providing me with an opportunity to carry out this project study and help me create this report on Analysis of movement of Gold, Silver and Crude Oil, and their correlation with BSE Sensex

I would also like to acknowledge support of the Apeejay for providing me with the values, and academics, which made this report possible. My regards to all the faculties who have ever taught me and to my friends who were by me during the course of this report. Nadeem Khan PGDM 18/089

Table of Contents

1. List of tables 2. List of Graphs 3. Executive Summary 4. Gold and Silver as Traded commodities 5. Company Profile 6. Literature Review 7. Research Methodology 8. Data Analysis and Findings 9. Conclusion 10. Bibliography 11. Annexure

Page 6 Page 7 Page 8 Page 9 Page 21 Page 37 Page 46 Page 50 Page 59 Page 61 Page 63

List of Tables 1. Combined Spreadsheet a. First sheet contains all information about gold. b. Second sheet contains all information about silver.

List of Graphs
1. NCDEX Gold vs NYMEX Gold 2. Gold spot vs BSE Sensex 3. Gold vs Silver 4. Gold vs Crude 5. NCDEX Silver vs Silver NYMEX 6. Crude vs Dollar

Executive Summary

The project taken for my Summer Internship was Analysis of Movement of Gold, Silver and Crude Oil and their correlation with Stock Exchange Index. The first step was to briefly describe the products, then we can study the basics of commodities as a financial instrument and how and where the commodities can be traded. And further find any correlation amongst the different commodities.

Did a statistical analysis of Gold , Silver and Crude Oil viz a viz different variables that might effect the movement of these commodities. These variables were the commodities amongst themselves and other factors like Sensex, inflation, etc.

After doing the analysis, we came to conclusion that there is no considerable correlation with commodity instruments and BSE Sensex.

Gold Silver and Crude as Traded Commodities

Before directly getting on to Gold Silver and Crude oil as commodities, we must discuss about commodities in brief. Commodities trading is the oldest profession of human race, since from the times of Egyptians to Sumers. Sumers were known to trade in animals and grains. Commodities trading have made advances in human civilization like no other thing. Trading was what made the Vikings spread world-over, and laid the foundation of current marine transportation. Furthermore the need for various commodities in various eras have given rise to phenomenon that changed the world entirely. The Gold Rush and the Spice Route the two phenomenon which changed the respective countries USA and India respectively were both in pursuit of commodities. With industrialization the need for certain metals rose and hence the speculation on their prices made fortunes for many. Iron, Copper, Aluminium, Coal and Coke were just a few of the ingredients which laid foundation of todays industries. In mid 19 th century , the demand for Aluminium was so high that its market price was more than that of the Gold.

What can be said of the liquid gold the Crude Oil, which made more billionaires in the late 19th century and early 19th century more than any other business. Be it the John D. Rockefeller's legendary Standard Oil Company or the Royal Dutch Shell company. The value of oil sky rocketed when in 1920s a certain Henry Ford from Detroit established the assembly line for automobiles, this helped economies of many countries.

Gold- Gold is a chemical element with the symbol Au (from Latin: aurum "gold") and an atomic number of 79. Gold is a dense, soft, shiny metal and the most malleable and ductile metal known. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a transition metal and a group 11 element. With exception of the noble gases, gold is the least reactive chemical element known. It has been a valuable and highly soughtafter precious metal for coinage, jewelry, and other arts since long before the beginning of recorded history. In addition to it Gold has been related to history of many a cultures and have been linked to colonization, and wars as in the case of Southern Africa and Mayan civilization respectively. Gold can be found in the pyramids of Giza and even in the vaults of the Nizam of Hyderabad Sir Osman Ali Khan. Gold led to the Gold Rush of the early 19 th century which led to huge migrations to various parts of the world. Gold was later used as a global standard for Currency as The Gold Standard. This clearly states the importance of Gold all over the globe and universal nature/appeal of the metal. Silver- is a metallic chemical element with the chemical symbol Ag (Latin: argentum, from the Indo-European root *arg- for "grey" or "shining") and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal. The metal occurs naturally in its pure, free form (native silver), as an alloy with gold and other metals, and in minerals such as argentite and chlorargyrite.

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Silver, the white metal can be spotted in the ruins of Greece and in the utensils of Moguls, and also in coins world over. Silver is used in numerous alloys to give varied uses ranging from Jewelery, Industrial coatings, to tooth fillings. Silver as a jewelery has been known as a gold for the poor, i.e. it has been sought-after by those who can not afford gold. But off late Silver has given returns almost 2-3 times that of Gold in the same period.

Crude Oil- Oil or liquid gold as it is also called lovingly is one of the most important and crucial resource known to man. Fuel is required to run any machinery and this is the fuel which ran the industries of the 20th century. In its refined form it can run anything from cars, airplanes to diesel engines, while in its crude form it is not of any use to anyone but oil refining companies like Shell, Exxon, RIL, and many more. Importance of oil in globe can be derived from the fact that even a small disturbance in one part of the world shakes the oil prices all over the world. This is one of the primary reasons that speculative investments/trading in crude oil is one of the most prevalent. Crude Oil is the oil as it is obtained from drilling the oil wells, this is further refined to get petrol, diesel, LPG, LNG, Jet Fuel, vaseline, light crude, sweet oil, and many more economically viable components are derived using the method of fractional distillation. Hence crude is the main ingredient for many industries and hence is so much soughtafter, which explains the heavy fluctuations in demand and supply and hence the price of the crude oil.

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Commodities Trading Commodities are nothing but physical goods of a value by themselves or after being converted/processed further to give rise to more refined and useful products. Different products(hereafter referred to as commodities) have different usages and demand and supply. So a trader buys the products when he/she feels the demand is low and therefore the price of the commodity is also low. The trader then waits for the right time to sell his/her purchase to the one in need who in turn will process the goods for sale. This was a crude way to learn commodities trading, and was what used to happen since centuries, but with regulation and government interventions, the trading in commodities have become more refined, and diverse and open to all not just to businessmen but also to those who do not have the primary job of being in that business. Therefore it would not be wrong to say that the entire commodities market runs on the basic principle of Speculation.

Like any other security, commodities are also traded in exchanges(like stock exchange for stocks). These are known as commodity exchanges, few of the examples of such exchanges are :MCX ( Multi Commodities Exchange, Mumbai, India), NYMEX ( New York Mercantile Exchange, New York, USA), LME ( London Metal Exchange, London, UK), TOCOM ( Tokyo Commodity Exchange, Tokyo, Japan), DCE (Dalian Commodity Exchange, Dalian, China), et al

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These exchanges trade in commodities like stock exchanges do in stocks and there are primarily ways to do that : -

1. Spot Trading, 2. Derivatives (Futures, Options, and Swaps).

Spot Trading Spot Trading is relatively a new concept in India with National Spot Exchange which opened its doors to traders in 2005. Spot trading looks into immediate delivery of the commodities as opposed to the derivatives, where the delivery takes place in a future time.

Derivatives In Derivatives Trading the transaction takes place on a contract basis. That is the investor/trader promises to buy/sell a commodity on a certain date, and the entire process takes place on the basis of speculation. This is the more chosen method to trade in commodities. Derivatives contracts can be broadly classified into 3 categories : -

1. Futures, 2. Options ( Call and Put), and 3. Swaps.

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Futures A futures contract is a mutual binding agreement between two parties to deliver or accept and pay (or undertake a cash settlement)

1. a qualitative explicitly determined underlying (in this case commodities); 2. in a certain quantity; 3. at a fixed date; and 4. at a fixed, already at conclusion of the contract determined price. Options

An option is the right, but not the obligation, to the underlying instrument at a particular price and particular time. The underlying instrument can be a stock, futures contract, Exchange Traded Fund, index security, interest rate, or other market-traded instrument with options available. There are two types of options traded on the market, call options and put options :

Call option is the right, but not the obligation, to buy the underlying instrument at a particular price and particular point in time.

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Put option is the right to sell, or be short, the underlying instrument at a particular price and particular point in time. This contract is made when the buyer is of perception that the market will fall/bearish. Options has following important terms associated with it : 1. Premium ( its the cost of the option determined by demand and supply) 2. Strike Price ( is the price at which the buyer has the right to buy or sell the instrument) 3. At, In and Over the Money, this is the way to express the option in relation to its strike price. i) At the money(ATM) means that the strike price is very close to the currently traded price. ii) In the money(ITM) means that the strike price is lower than currently traded price or the underlying instrument has already crossed the strike price. iii) Out of the money(OTM) means that the underlying instrument price hasn't reached the market value .

Mostly traders use ATM and OTM options in their trading options.

4. Intrinsic Values Intrinsic value is present in options that are in the money. This value is related to the options strike price and the current price of the underlying instrument.

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Here is how intrinsic value on a call option is calculated:

Underlying price strike price = intrinsic value

This is how intrinsic value on a put option is calculated:

Strike price underlying price = intrinsic value

Swaps

A Swap is a derivative in which counter-parties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. In case of Commodities, a swap is an agreement whereby a floating(or market/spot) price is based on an underlying commodity is exchanged for a fixed price over a specific period. This is done usually to hedge against the price of a commodity. The vast majority of commodity swaps include oil. For instance , if an organization uses a lot of oil might use a commodity swap to secure a maximum price for oil.

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Market Participants Trading in commodities became more accessible by common man by establishment of commodities exchanges like the CBOT, NYMEX, BLME, IPE, MCX, NCDEX, etc. made life better for small investors who were interested in commodities. In commodities the purpose for entering could be many, viz.

1. Hedgers, 2. Arbitragers, and 3. Speculators (Traders).

Hedgers

Hedging is the act of minimizing the risk in one financial instrument by investing in other instrument. For example an investor has invested in the stock market, and the market seems to be bearish. In such a case the investor can put his money in the Commodities market to reduce the loss by making profit in the commodities or by eliminating the chance of loss of a larger amount had the entire money was invested in a single instrument. It is therefore always advised not to invest in a single instrument. Also commodities can be used as a hedge against inflation.

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Arbitrager Arbitrage is the practice of making use of the differences in the prices of the same/similar product in different markets. If an existing or expected cash position is compensated for via an opposite future, the market participant is classified as a hedger. Hence, for the commodity producer, there is a fixed net profit; for the commodity manufacturer, there is a fixed purchase price.

Speculators The largest class of investors in commodities market, who invest their money into the market depending upon their view of the market and also about what is the current market trend in investment. For instance a trader might invest his/her money in the Brent Crude by observing a mild disturbance in the Middle-East which might culminate into a war. Also in India before the auspicious occasion of Akshaya Trithya , an investor will buy Gold Futures or Gold Call Option, because its the time when buying Gold is considered auspicious and to quite an extent mandatory.

While on the other hand a trader might speculate that the prices of crude might fall down within one or two months as the war torn Libya might stabilize by UN orders and at that time the Crude prices might get lower than what they are today, so he/she may shortsell(sell now buy later) or invest in a put option of Crude.

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Commodities in India India is one of the largest commodities market in the world, with MCX being the world's largest Silver and second largest Gold trading Commodity exchange. India accounts for around a quarter of global Gold demand. Not only Precious metals like Gold and silver, India is famed for its Spices and Agri-based commodities. With a large population and increasing disposable income the number of investors in both equity and commodities are increasing by everyday, add to it the competitive environment of the brokerage firms sprouting by day, the investors are getting better choices on brokerage,

technical/fundamental reports, assistance, etc. The history of commodities in India can be traced back to times when trading in commodities wasn't seen in many countries. In fact the British East India Company also came to trade in one of the most sought-after commodity The Spice. Today the commodity market is very well organised with many governing bodies looking after the process. The major bodies which are associated with the commodities trading are : -

1. Multi Commodities Exchange (MCX), 2. National Commodities and Derivatives Exchange (NCDEX), 3. Forward Markets Commission (FMC), 4. National Multi-Commodity Exchange(NMCE), 5. National Spot Exchange Limited(NSEL)

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Apart from the above listed there are various state level exchanges and various boards of commodities like

1. Spice Board 2. Coffee Board 3. Coconut Development Board 4. National Bank for Agriculture and Rural Development (NABARD), etc.

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SHAREKHAN LTD.
Background Sharekhan is online stock trading company of SSKI Group, provider of India-based investment banking and corporate finance service. Sharekhan is one of the largest stock broking houses in the country. Shri Shantilal Kantilal Ishwarlal Securities Limited (SSKI) has been among Indias leading broking houses for more than a century Sharekhan Ltd is India's leading online retail broking house with its presence through 1288 'Share Shops' in 398 cities. It has a client base of 1.5 Corers. Launched on 8th February, 2000 as an online trading portal, Sharekhan offers its clients trade execution facilities for cash as well as derivatives, on BSE and NSE, depository services, mutual funds, initial public offerings (IPOs), and commodities trading facilities on MCX and NCDEX. Besides high quality investment advice from an experienced research team Sharekhan provides market related news, stock quotes fundamental and statistical information across equity, mutual funds, IPOs and much more. Sharekhan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhans expertise lies in stocks and that's what he talks about with authority. To sum up, Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth of content that will help you stalk the right shares.

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Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker's poll held recently, SSKI won the 'India's best broking house for 2004' award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. Technology With their online trading account one can buy and sell shares in an instant from any PC with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares. Accessibility Sharekhan provides services for investors. These services are accessible through many centers across the country (Over 650 locations in 150 cities), over the Internet (through the website www.sharekhan.com) as well as over the Voice Tool.

Knowledge In a business where the right information at the right time can translate into direct profits, investors get access to a wide range of information on the content-rich portal, www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will empower them to take informed decisions.

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Convenience One can call Sharekhans Dial-N-Trade number to get investment advice and execute his/her transactions. They have a dedicated call-center to provide this service via a Toll Free Number 1800-22-7500 & 39707500 from anywhere in India. Customer Service Its customer service team assist their customer for any help that they need relating to transactions, billing, dmat and other queries. Their customer service can be contacted via a toll- free number, email or live chat on www.sharekhan.com.

Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical research. Their analysts constantly track the pulse of the market and provide timely investment advice to customer in the form of daily research emails, online chat, printed reports etc .

The Promoters In May 2007, the then promoters of Sharekhan Ltd. the Morakhia brothers who owned 37% and General Atlantic, Intel Capital and some funds advised by HSBC Private Equity India who together owned 48% to the Citi Venture Capital. This made the Citi Group the leading stakeholder in the SSKI's retail broking arm. The deal was estimated to be at around Rupees 4.7 to 4.8 Billion. The remaining 15% ownership of the company remained with the 300 employees of the company. 23

Vision and Mission Vision Sharekhan practices customer centric approach to be leading broking Firm. The Company Vision is: i. To be the top most company for providing investment advisory and financial planning services in India. ii. To be a leading investment intermediary for transaction through both online and offline medium. Mission To educate and empower the individual investor to make better investment decisions through quality advice and superior service. a) Educate and empower i. Research backed advice, which is easy to understand, retail specific, and discipline. ii. Total equity solutions for the entire investment process. iii. Relationship management b) Superior service i. Integrity & Transparency , iii. Professionalism , iv. Information product, news, operations , v. Hassle free trading , vi. Enjoyable experience our goals is to accomplish top most position in both online and offline medium of trade and also to remain a customer centric organization. 24

Quality objectives Objectives represent, what needs to be accomplished in order to reach the goals. To increase the customer base of investors to invest in all kind of securities. Sharekhan has one among the largest network of outlets of the either trading firms with 180 outlets. To retain the existing consumers with research backed advice and personalized care the needs of the consumer.

MANAGEMENT TEAM

Tarun Shah Shankar Vailaya JaideepArora PathikGandotra Rishi Kohli Nikhil Vora

: CEO of the company : Director (Operations) : Director (Products & Technology) : Head of Research : Vice President of Equity, Derivatives : Vice President of Research

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Organizational structure of Sharekhan Ltd.:-

Sharekhan Ltd. CEO DIRECTORS COUNTRY HEAD BUSINESS HEAD CLUSTER HEAD REGIONAL HEAD BRANCH MANAGER ASSISTANT BRANCH MANAGER CITY SALES MANAGER AREA SALES MANAGER ASSIATANT SALES MANAGER SALES EXECUTIVE TRAINEES

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Services Offered Sharekhan Limited offers a wide array of services to the investors which has always been the USP of the company for over 8 decades.

The services include :-

Equity and Derivatives Trading With the growing economy and opening up of the economy post-liberalization of '91, huge number of investors are showing interest in Equity markets, the company is a broker member of both National Stock Exchange and the Bombay Stock Exchange, and offers trading and investing facilities to its clients. Moreover with the better returns from the market(average), as compared to bank Fixed Deposit, and PPF, etc. investors are also investing in stock exchange.

With increasing uncertainties in the stock exchange, investors now find solace in Derivatives market ( futures, options and swaps) to hedge ( minimize) risk or make for the losses in other investment avenues.

Dial-N-Trade For the always on the move clients, the company offers ability to trade by calling the assigned broker via a secured and recorded line, using a Telephone ID and Tpin, which makes the transaction very secure.

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Depository Services Late '90s and early 2000s saw almost the entire world going on the Worldwide-Web, stock broking was no exception, with the SEBI regulation, all new shares would be issued in electronics format, i.e. the dematerialization of the shares happened. So the stocks now issued had to be deposited with the stock brokers in electronic form in their vault/depository. ShareKhan Limited offers its clients such service for both shares of NSE and BSE, by the virtue of being member of NSDL and CDSL respectively.

Commodities Trading Commodities have been the oldest way to trade, since commodities have been traded even when the currency did not exist. Even today Commodities is one of the apple of the eyes of the traders. Commodities trading range from Agricultural goods like Spices, Pulses, oils, etc. to Non-Agri based products like Crude oil, non-precious metals like copper, aluminium, nickel, zinc, etc. to metal bullion (precious metals) Gold, Silver, Platinum, etc. Commodities are famous because they have a high risk- high return policy, with returns of as high as almost 100% within a year. ShareKhan offers trading in commodities and is a member of all th major commodities exchanges in India and gives option to trade both in Derivatives and Spot-trading of commodities.

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Online Service The company ShareKhan Limited was formed with the sole purpose of providing an online platform of trading to its clients, and did that successfully by being the first company in India to do so. In 2000 the SSKI group then promoted by the Morakhia brothers launched their web portal www.sharekhan.com. The company initially provided only a very few options to invest, but soon expanded by providing various ways to interact, viz. First Step - a platform for novices, or new investors, done through the web browser. Fast Trade - it provides much diverse options, aimed at expert users, who can use this platform to track all their investments and their favorite scrips (stocks). Trade Tiger A Microsoft .NET based software, which is also used by the brokers at ShareKhan, is a one stop window for investors to track all their investment needs, be it Equity, Derivatives or Commodities, one can watch real-time fluctuations in the prices of the Securities.

All the online services are secure and done on a 128 bit SSL secure connection, which is of the industry standard for online security , the same is followed by banks, airlines, ecommerce sites.

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Portfolio Management Services (PMS) Portfolio management services is a specialized service for clients who have a large sum of money to invest. In case of ShareKhan, the minimum amount for investing in for PMS is Rs. 5,00,000. The client is assigned a Relationship Manager, who keeps a track of all the investment to be made on the behalf of the client. As the name suggests, the company creates a portfolio for the client, which is based upon the strong in-house Research Team of the company which based upon various fundamental and technical researches create a very diverse portfolio for the client so as to minimize the loss which if otherwise would have been higher. The company operates the PMS on the profit sharing basis, i.e. if and when a client registers a profit of 20% of his investments, the company charges 15% of the profit, the company doesn't charge anything if the client books any loss.

Fundamental and Technical Research In analysis of the financial markets there are two major procedures, namely 1.Technical Research, and 2.Fundamental Research. The Technical Research makes use of the past performance of the financial instrument and predicts statistically the future prospects, this includes finding similarities in graphs and creating correlation with other instruments, etc. The Fundamental Research on the other hand looks at the fundamentals of the company, i.e. the Financial Statements, the news related to the company, and its sector and other fundamentals like M&As, future projects, buying of patents, etc. and makes use of the same to make predictions for the clients. 31

Marketing Strategies of Sharekhan Ltd.:1. Increase the number of client relationships: Sharekhan is focused on increasing the number of client relationships through a wide network of offices across India and having more number of relationship managers to service these relationships. They plan to grow their business by growing the number of client relationships. They believe that increased number of client relationships will add stability to their earnings.

2. Multiple Channels Enhance Customer Experience and Opportunities to interact with us: Sharekhans clients can access their products & services through 2000 offices spread across 460 cities; through operator assisted call centers; or through their website www.sharekhan.com; or through their respective relationship managers; or through marketing associates. These multiple channels provide flexibility to the clients and allow them to utilize their existing business relationship with them through any channel from any part of India. Companys strategy is to provide the most convenient, efficient and value added channel to the client at the lowest possible cost, and allow the clients with choice varied access points.

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3. Relationship manager driven sales model- provide high quality service and exploit cross sell opportunities: Companys clients get benefit from the personal attention and advice of the trained and motivated relationship managers. All the relationship managers are qualified and educated professionals, who have been extensively trained in-house to provide the best products & services to the clients. These relationship managers are motivated to develop long term relationships with the clients and can access a variety of resources within the company, such as investment specialists, research services and others to add value to their clients. Most of the clients have dedicated relationship managers irrespective of the channel they use.

4. Low cost and highly scalable business: Sharekhan has utilized the technologies available and have constantly invested in products and innovations to provide an enhanced experience to its customers. The benefits of such infrastructure include integrated customer trading account with depository services; electronic gateway for instant funds transfer to and from the bank to the brokerage account; and comprehensive client systems that track all activities in various segments. They believe that technology and systems are the two competitive edges in terms of lowering their operating costs; managing the business; reducing risk and providing an enhanced experience to the clients with superior service standards.

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5. BROKERAGE OFFERING: Companys retail equity business primarily covers secondary market equity broking. It caters to the needs of individual Indians and Non-resident Indian (NRI) Indians. They offer broker assisted trade execution and automated online investing and trading facilities to their customers. company offers the least brokerage in its sector which attracts the customers.

ACHIEVEMENTS OF SHAREKHAN: A Rated among the top 20 wired companies along with Reliance, HUFI, Infosys, etc by Business Today, January 2004 edition. Awarded Top Domestic Brokerage House four times by Euro Money and Asia Money. Pioneers of online trading in India. Most preferred financial destination amongst online broking customers. Winner of Best Financial Website award. Indias most preferred brokers within 5 years, Awaaz Customers Award 2005. Best Broking House award by CNBC India in 2005 & 2006.

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FUTURE PROSPECTS: 2, 00,000 plus retail customers being serviced through centralized call centers/ web solutions. Branches/Semi branches servicing affluent/ aggressive traders through high skill financial advisor. 250 independent investment managers/franchisee servicing 50,000 highly valued clients. New initiative Portfolio management servicing and commodities trading.

SHARE MARKET POSITION: Sharekhan enjoyed about 22% market share in Web business (online trading) in stock market. Three years ago, Web trading showed a lot of promise but with the market witnessing a downturn, there was not much interest among retail customers. But still Sharekhan is enjoying the largest no. of clients i.e. more than 15, 00,000.

National Image: Sharekhan is the first broking house which provided online trading facility to its clients in 2000. Having the first mover advantage, Sharekhan has the maximum no. of clients in stock market. Sharekhan also achieved Best Broking House Award and many other awards which added to its image & helped in attracting more clients.

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CONCLUSION: Sharekhan is in-fact Among the top 3 branded retail service providers. No. 1 player in online business. Largest network of branded broking outlets in the country serving more than 15,00,000 clients. Best service provider with least brokerage charges.

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Factors affecting Gold Price Gold one of the oldest known metals to civilized human beings has been admired for its beauty, sought for its rarity and valued for its malleability, anti-corrosion properties and luster only challenged by the Sun itself. It was because of these properties that Gold soon became the currency for the ancient kingdoms and transcended into standard for currency of the day. The value of gold has resulted in it breaking all barriers national, cultural and political borders in making it ideal currency. Various forms in which investments can be made in Gold : 1. Bars of various weights depending upon the country.(also called biscuits when in small weight) 2. Gold Coins of small weights generally 2gm, 5gm and 10gm. 3. Exchange-traded funds. 4. Certificates, which avoid the hassles of physical possession of Gold.

Gold prices were previously determined by many factors, economical, political ,et al, but this has been replaced by NYMEX Gold and London AM/PM fixing. . This was a result of Washington Agreement.. However, in the past few years, the major factors impacting the gold price can be summarized as under: 1. US Dollar value. 2. International demand for Jewelery. 3. Increase in demand for exchange-traded paper backed products

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US Dollar Value : The dollar's decreasing value and predictions from the investment veterans have always been refuted by the investors and from the officials of the Government. As long as foreigners are willing to pour in billions of dollars every working day, the dollar won't crash. But if foreign confidence were to wane, the US dollar will be heading south. No matter how you look at the US twin deficits and America's future fiscal liabilities, this problem is huge and some painful adjustments not only seem to be necessary but unavoidable as well. It should be obvious that one of these major painful adjustments will be a massive devaluation of the US dollar. It seems that the idea of a dollar devaluation is

gaining support from the Fed when the President of the Dallas Fed, Robert McTeer recently said: "over time, there is only one direction for the dollar to go - lower." Former ECB president Wim Duisenberg, quoted by Spanish Newspaper El Pais, recently said: "A dollar devaluation seems inevitable due to the tremendous US Current Account deficit." Furthermore he recently said on Dutch television that we can only hope and pray for a smooth economic transition in the US. Why is this so important? Simple, the US dollar is the key driver for Gold; as the dollar goes, so will gold; but in the opposite direction. Gold is the anti-dollar with a high inverse correlation to the dollar! In the end, gold is still a monetary asset and trades like a currency.

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Growth in Demand for Jewelry: Although new alternatives like Palladium, Platinum and Diamond, the demand for gold hasn't reduced. India is the largest consumer of Gold when it comes to personal jewelery use, where Gold is not just a precious metal, but pious and sacred offering to the God, and on the day of Akshya Trithi its almost mandatory for everyone to buy gold. The demand for consumption of gold in jewelry was 6% higher at 735 tonnes and also comprised a new first-quarter record. The US, which accounts for 10 % of world gold demand, is also one of the markets where public taste in gold jewelry is enjoying a renaissance. The Indian market "the world's largest for gold demand" was 23 % higher following the marriage and festival period which, in turn, has led to restocking by retailers. There were steep falls in demand in Turkey and Taiwan fall of 38% and 31% respectively.

Increase in demand for exchange traded paper backed products: For the first time in history, gold can be purchased like any listed stock at select stock exchanges of the world like London Stock Exchange, Australian Stock Exchange (Gold Bullion Securities) and New York Stock Exchange (Street Tracks Gold). The World Gold Council initiated Electronic Traded Funds have displayed very good performance and growth in volumes since launch.

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Central Bank Regulation Various National central banks like Federal Reserve, RBI, European Central Bank (ECB), etc and the International Monetary Fund (IMF) also regulate the price of Gold to quite an extent, this is evident as by the end of 2004, central banks and international organizations held as much as 19% of the all above-ground gold. The Washington Agreement on Gold (19999), limits gold sales by its members (USA, European Union,Japan, Australia). The Bank of International Settlements and the IMF restricted to 500 tonnes a year . European Central Banks like Bank of England, and Swiss National Bank, were key sellers of gold this period. But even they had a restriction on sales over 400 tonnes of gold per year.

Inflation Inflation is the rise in the general price levels, or the decreased buying power of the buyer. This happens because of many economical, political and international factors. Treating gold simply as a commodity misses the point, fascinating as the particular details of its market may be. From earliest times, gold has served as money, and this association persists in many people's minds, despite the metal's disappearance from our coinage, the abandonment of the gold standard, and Mr. Keynes' wry comments about digging up gold only to bury it in bank vaults. Much of the discussion about gold prices centers on whether the dollar remains "as good as gold"6 and what changes in the price of gold mean for prices and inflation in the rest of the economy.

40

Gold's most natural relationship to the general price level is what one might expect for any good or asset: A higher general price level should be associated with higher gold prices. To put it differently, cars cost more in 1998 than they did in 1958; so do haircuts and movie tickets. If it takes more dollars to buy cars, haircuts, and movie tickets, it seems likely that more dollars would also be needed to buy an ounce of gold. Over the long term, this generally holds true: An ounce sells for more now than it did in 1970 ($285 versus $35). On shorter time horizons, however, the Consumer Price Index (CPI) and the price of gold often go their separate ways. Gold prices today are less than half what they were in January 1980, while the CPI has more than doubled. This is not due solely to the gold price spike of the early 1980s; gold prices now are lower than they were in 1985, even though the CPI has risen more than 50 percent since then. Such a relative price change is not unique. Consider the price of computers, which has dropped so precipitously that a 1998 laptop is more powerful than a 1960s commercial mainframe. Other factors which also affect the price of Gold are the alternative avenues for investment, viz Bank Deposit Rates/Fixed Deposits, Average Share Market Returns, Mutual Funds Returns, PPF Rates, Fall in Supply, and Gold Mine Production

41

Factors Affecting Silver Price

Large Traders or Investors Like most commodities, the price of silver is driven by speculation and supply and demand. Compared to gold, the silver price is notoriously volatile. This is because of lower market liquidity, and demand fluctuations between industrial and store of value uses, the volatility is so high that within half an year from 3 rd January 2011 to 29th June 2011, the change in Silver was over 10%, where it rose as much as 50% by 26 th April, while Gold showed a mere 6% of result for half an year. The silver market is much smaller in value than the gold market.

Various forms in which investments can be made in Silver are the same as that of the Gold, only difference is that silver being relatively less expensive, is held in higher weight quantities, like in India standard for silver is a Kilogram, while for gold is 10gm.

The London silver bullion market turns over 18 times less money than gold. With silver's annual demand only amounting to around US$ 15 billion, it is not difficult for a large investor to manipulate and control the entire market. One example of it is the Hunt Brothers' manipulation of '80s, who caused a spike in January 1980 of the London Silver Fix to $49.45 per troy ounce, silver futures to reach an intra-day all-time high of $50.35 per troy ounce and a reduction of the gold/silver ratio down to 1:17.0 (gold also peaked in 1980, at $850 per troy ounce). In April 2007, Commitments of Traders Report revealed that four or fewer traders held 90% of all short silver futures contracts totaling 245 million troy ounces, which is equivalent to 140 days of production. 42

Hedge against financial stress Silver, like all precious metals, may be used as a hedge against inflation, deflation or currency devaluation. As Joe Foster, portfolio manager of the New York-based Van Eck International Gold Fund, explained in September 2010: The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies the printing of money basically then the less valuable the currencies become

Industrial ,Commercial and Consumer Demand The traditional use of silver in photographic development has been dropping since 2000 due to the growth of digital photography, but still silver finds its usage in electronics industry owing to its highest electrical conductivity, in Photo-voltaic industry, and medical equipments. Other new applications for silver include RFID tags, wood preservatives, water purification and food hygiene. The expansion of the middle classes in emerging economies aspiring to Western lifestyles and products may also contribute to a long-term rise in industrial and jewelry usage.

43

Factors Affecting Crude Oil

World Oil Demand Like anything which sells, the price of crude oil is also determined by supply & demand. The global oil market prices are primarily influenced by demand and supply forces. The level of supply is largely dependent on the availability of oil in the reserves. Supply shortage causes an upward movement in the price pressure.

This may be due to factors such as: 1. unplanned refinery shortage 2. unforeseen demand increases 3. pipeline problems

Supply levels are established by OPEC to a large extent because market demand and consumption levels in the US influences oil prices drastically. The demand for oil spikes during peak seasons, particularly during the winters. This is because it is usually the season of winters and vacations. So, the demand for heating oil escalates, and heating oil accounts for 25% of the consumption of total crude oil next only to Gasoline/Petroleum.

44

Trading in Oil Major exchanges which deal in crude oil are CME,NYMEX, IPE(London), Brent, MCX, etc. and the movement in these exchanges and the speculation in futures contract of oils in these exchanges cause a significant shift in the prices of the oil. The changes in Oil Futures is speculation based, which can happen because of many reasons, mainly political, economical, technological,

Dollar Price The value of US Dollar has a very strong effect on the price of crude oil. Decrease in the value of the dollar has a considerable increase in the value of the Brent and WTI spot and futures price of the crude oil, since the same amount of dollar can now buy more crude and as a result more and more investors start buying crude which results in effective increase of the prices.

45

Research Methodology
Problem Definition To establish a relationship between movement of prices of Gold, Silver and Crude Oil. And further find a correlation if any with the various major Equity Exchanges of the world. We give alternate hypothesis : 1. Sensex bear a significant correlation with Crude 2.Sensex bears a significant correlation with Silver 3. Sensex bears a significant correlation with Gold.

Approach to the Problem First of all, we need to find the various credible sources from where we can find the data of past six months ( working days, 5 days a week, national holidays market closed). After listing down the available sources, find out the historical data of commodities prices at various commodity exchanges, as it is the major part of the research. This is followed by collecting the information about various probable factors which might influence the price fluctuations in the selected financial instruments, viz. Gold, Silver, Crude oil(Petroleum). Once we have collected the data, we create a spreadsheet, and then do various statistical analysis on the data. Simultaneously, we also collect the data for the various stock exchange indices (NASDAQ,Nifty, Sensex,FTSE), and find any correlation between the commodities' prices or on the factors that we enlisted. Since most of the data is collected on a daily basis, the limitation of the research was to remove inflation's influence on the variables, as inflation data is only available for a month. But graphical analysis have been done where ever possible.

46

Types of research data The major area of my project was to analyze the movement of gold silver and crude process on commodity exchanges and create a relation between it and movement in the BSE Sensex, with it I also carried out a market surveys about the consumer perception of the commodities as an investment option, and consumer perception about investment in equity

Primary Data The Primary data includes questionnaires which were filled both online and offline the analysis of which could be found in the Chapter VI. Kindly find a copy of sample questionnaire in Chapter X the electronic form in the CD attached.

Advantages of Primary Data 1. The major advantage of collecting a Primary Data is that it is Personalized, i.e. one can collect exactly the information he/she needs. 2. Select your own set of target audience. Disadvantage of Primary Data 1. The secondary data is performed by better equipped and more experienced analysts and reaching their credibility is hard. 2. The time used on collecting the Primary data could have been utilized in some other work. 3. People may not reply if emails and letters are used.

47

Secondary Data The major research area included analysis of price movements of various commodities, the data for which was collected from various trusted sources depending upon the the data required. The source for each data is given appropriately and all efforts have been made not to infringe any Intellectual Property Rights. These data can be found attached in Chapter X and also in electronic form in the CD attached.

Advantages of Secondary Data 1. The secondary data is always a better option if one has a better authority collecting the data, in this case the various Exchange bodies, like NSE, NCDEX, NYMEX, etc. 2. Less chances of errors as these data are thoroughly checked for errors before publishing.

Disadvantages of Secondary Data 1. The information and the data may not be accurate. Source of the data must always be checked 2. Secondary data may be general and vague and may not really help companies with decision making.

48

Data Analysis and Findings

Data Analysis is a very important component of any research and this is the constituent, which makes any researcher to come to a conclusion. In our case the Data is very diverse and isn't just numeric, attached with are various units of measurements (weight and volume), absolute numbers, and currencies. And to be able to compare them to get proper results we have to make them streamlined and get them all to one single comparable unitthe PERCENTAGE.

So we first of all began with converting all the changes in the time-series data into percentages, which includes prices of commodities in $ and INR, weights of Gold in Troy ounce and 10gm, Silver in kilograms and troy ounce and Crude in $/barrel. We then proceed to stock exchange indices the BSE Sensex, NSE Nifty, NASDAQ, and the FTSE's FTSE100(Footsie).

Once we had all the movements of gold,silver,crude prices and indices in percentages, we could study the movement, and then we proceeded to the statistical analysis, finding coefficients of correlation.

49

Gold Price movement

NCDEX Gold vs NYMEX Gold

sub-title
Rs.23,000 Rs.22,500 Rs.22,000 Rs.21,500 Rs.21,000 Rs.20,500 Rs.20,000 Rs.19,500 Rs.19,000 Rs.18,500 Rs.18,000 January March May June December February April May
Time

$1,600.00 $1,550.00 $1,500.00 $1,450.00 $1,400.00 $1,350.00 $1,300.00 $1,250.00 $1,200.00 Gold Spot NYMEX Gold

Price

figure (i) The figure shows the movement of Gold Spot NCDEX and NYMEX Gold Spot.

From the above figure (i) it is we can see great similarities between the two curves. On statistical analysis correlation comes to be 0.9826 , which means that there is a very strong correlation between NCDEX and NYMEX spot rates of gold.

50

Gold vs Index

Gold Spot vs BSE Sensex

23000 22000 21000
Gold Spot

21000 20000 19000

BSE Sensex

20000 19000 18000 17000 16000

18000 17000 16000

Gold Spot Sensex

15000 25. Jan. 2011 28. Mar. 2011 30. May. 2011 22. Dec. 2010 24. Feb. 2011 29. Apr. 2011 28. Jun. 2011
Time

figure (ii) The above figure shows the movements of Gold Spot at NCDEX and the BSE Sensex. Their correlation comes out to be -0.24349 , which shows that gold and Sensex move opposite to each other. Though the gravitational force of one on the other is not very high, but when clubbed with other factors (like inflation, silver prices, alternative investment options) it does create a considerable pull. But on its own there is a small but negative correlation between Gold and Sensex.

51

Gold Vs Currency When Gold is compared to the movement of the currency, NYMEX Gold Spot shows a correlation of 0.63 with Dollar vs Pound , which is a strong correlation, that is there is a considerable relation between the movements of the two. Therefore when the value of Dollar falls or the value of Pound increases, the spot prices of Gold also increases.

Gold vs Silver

Gold vs Silver
Rs.23,000 Rs.22,500 Rs.22,000 Rs.21,500 Rs.21,000 Rs.20,500 Rs.20,000 Rs.19,500 Rs.19,000 Rs.18,500 Rs.18,000 Rs.80,000 Rs.75,000 Rs.70,000 Rs.65,000 Rs.60,000 Rs.55,000 Rs.50,000 Rs.45,000 Rs.40,000 Gold Spot Silver spot

Price

Rs.35,000 25. Jan. 2011 28. Mar. 2011 30. May. 2011 22. Dec. 2010 24. Feb. 2011 29. Apr. 2011 28. Jun. 2011
Time

figure (v) The above figure shows similarities in the movements of both silver and gold, the troughs and peaks appear at the same times, and the both curves seems to fit into each other. Statistically, they bear correlation co-efficient of .70 , which is a strong correlation.

52

Gold vs Crude Oil

Gold vs Crude
$1,600.00 $1,550.00 $1,500.00 $1,450.00 $1,400.00 $1,350.00 $1,300.00 $1,250.00 $120 $110 $100 $90 $80 $70 $60 $50 NYMEX Gold WTI Crude

$40 21. Jan. 2011 18. Mar. 2011 16. May. 2011 22. Dec. 2010 18. Feb. 2011 18. Apr. 2011 10. Jun. 2011
Time

figure (vi) The above graph is a representation of movements of NYMEX Gold prices and WTI Crude oil prices. Their correlation comes out to be 0.588 , which is a strong correlation.

53

Silver Price Movement

Silver NCDEX vs Silver NYMEX

Rs.80,000 Rs.70,000 Rs.60,000 Rs.50,000
Price

$60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 Silver Spot NYMEX /Troy

Rs.40,000 Rs.30,000 Rs.20,000 Rs.10,000 Rs.0 27. Jan. 2011 31. Mar. 2011 6. Jun. 2011 22. Dec. 2010 28. Feb. 2011 5. May. 2011
Time

figure (vii) Above graph is for Indian silver market and American Silver market. They have a very strong correlation co-efficient of 0.90 .

Silver vs Sensex Silver and Sensex do not have any considerable correlation, as the co-efficient of correlation is a meager 0.0784. There is no considerable correlation.

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Silver vs Currencies

Silver as a commodity is more volatile than gold. This can also be explained through its reaction to fall in Dollar, which it reacts quite well. Co-efficient of correlation with Dollar vs Pound is 0.44, which is medium correlation. Therefore a big fall in dollar is reflected in only a slight increase in Silver.

Silver vs Crude Silver and crude have a higher correlation, with the correlation co-efficient 0.8947. which is a very strong correlation, and means that silver corresponds equally well to any shift in the prices of the crude oil.

Crude Price Movements Already discussed about the movements of crude with gold and silver, we now are left to analyze crude oil with dollar, and Sensex.

55

Crude vs Dollar The major crude oil trade is done in dollars, so when the dollar falls, the market participants push the price of crude higher on the expectations that oil producers are entitled to at least the same prices as before in their own currencies.

Crude vs Dollar
$120.00 $115.00 $110.00 $105.00
Price

Rs.47

Rs.46 WTI Crude Dollar vs INR

$100.00 $95.00 $90.00 $85.00 $80.00

Rs.45

Rs.44

Rs.43 25. Jan. 2011 28. Mar. 2011 30. May. 2011 22. Dec. 2010 24. Feb. 2011 29. Apr. 2011 28. Jun. 2011
Time

Figure (viii) The correlation of the above relationship is negative and strong. The co-efficient is -0.7769. Which means when the price of dollar falls the price of crude oil rises considerably.

Crude oil vs Sensex Crude oil doesn't show any considerable correlation with the BSE Sensex, the correlation co-efficient is just 0.1339, making it a weak correlation.

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Findings

After analyzing all the commodities and the variables associated, we can see that all the commodities to bear a correlation to each other, while crude is very volatile with dollar, same is not true for gold and silver.

1. On the other side Silver and Gold have a very high correlation between each other and between their NCDEX and NYMEX counterparts, this demonstrates the global nature of the two commodities, and also the Indian influence on the global bullion market. 2. Crude doesn't bear any significant correlation with the Sensex, hence our first hypothesis is rejected. 3. Inflation has a significant effect on the price movement of the three commodities, which we can notice by the variations in the price w.r.t. Dollar movement. 4. Sensex and Silver have a co-efficient of correlation of 0.078, which is a very low correlation and hence our hypothesis second hypothesis is also rejected. 5. Gold and silver have a strong correlation with each other and gold also has a considerable correlation with the crude oil.

6. While not negligible, but still not considerable, the correlation of gold with Sensex at -0.24 makes us reject our third and final hypothesis.

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7. With all three hypothesis rejected, we can come to a conclusion that though by menial effect, the prices of Gold, Silver and Crude effect and are effected by the movement of the BSE Sensex, but that effect is not considerable enough to establish a relationship.

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Conclusions

It is more often said than realized : theoretical knowledge is just not enough, I realised it while doing my Summer Internship at ShareKhan Limited. It was here that I realised the huge day light between the theory and practical.

Working in ShareKhan gave me an opportunity to learn a wide array of new knowledge about the financial markets. Experienced the first hand exposure from the pioneer in its class- Online Stock Brokering, the nuances of the finance and the service sales model.

The best part of the training were the regular classroom training we had, which enabled us to gain the knowledge about the company's products and also about the stock exchange, the commodities exchange, and other financial instrument like Mutual funds etc. As Sun Tzu said centuries ago - Know your friends well, but know your enemies better. Not actually enemy, but in this case our competitors. In services industry, one can not live in isolation from its competitor's latest moves. Thats what we did here, knowing about the services our competitors like HDFC, ICICIDirect,Angel,Religaire, Bonanza,etc have to offer- the brokerages, the softwares, the AMCs, etc. Being a highly competitive sector, that one factor which your competitor doesn't offer stands you apart.

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Presenting oneself is the most important attribute in sales, and thats what we were trained by our highly motivated and always on their toe sales team. We prepared before pitching our prospective clients, their probable questions, their profile, predicting their needs from their profiles.

Being a sales job in this competitive industry, the success rate is very low, many a times one gets dejected from constant rejections from the clients. But being dejected is not the option, taking them in one's stride and learning from the mistakes is important.

Being from Hospitality industry, I had assumed that the consumer interaction would be similar, but the consumers in this industry are very demanding. This was something I learnt.

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Bibliography

Books

1. Mayo, Herbert. B. , Investments An Introduction, Seventh Edition, Thompson Southwestern 2. Frush, Scott, Commodities Demystified A Self Teaching Guide, McGraw Hill 3. Fabozzi, Frank. J., Fuss Ronald, et al, The Handbook of Commodity Investing, John Wiley and Sons Inc. 4. Dunsby Adam, Eckstein John, et al, Commodity Investing Maximizing returns through Fundamental Analysis, John Wiley and Sons Inc. 5. Kraus, Kevin M , Advanced Options Trading Approaches, Tools, and Techniques for Professional Traders, McGraw Hill

Magazines and Journals

1. Sinha, Sushil, Karvy Annual Commodity Report 2011 2. PwC, and MCX, Commodity Insights Yearbook 2010.

61

Internet 1. http://en.wikipedia.org/wiki/Gold_as_an_investment 2. http://www.personalfn.com/knowledge-center/fixed-income/fip-views-onnews/05-03-10/Factors_affecting_Gold.aspx 3. http://www.kitco.com/ 4. http://en.wikipedia.org/wiki/Silver_as_an_investment 5. http://www.nseindia.com/marketinfo/indices/histdata/historicalindices.jsp 6. http://www.bseindia.com/histdata/stockprc.asp 7. http://www.mcx.com 8. http://www.ncdex.com/ 9. http://www.gold-eagle.com/editorials_98/haubrich121698.html

62

Annexure

63

Form Number :

Survey on Commodities as an Investment Option

Q 1. Name : ___________________________ Q 2. Age a. Below 25 years d. 75 and above b. 25 to 50 years c. 50 to 75 years

Q 4. Gender : a. Maleb. Female Q 5. Contact Information a. Phone/Mobile : _________________ b. e-mail id : ______________________________ Q 6. Annual Income a. Less than 2,00,000 10,00,000 and above b. 2,00,000 to 6,00,000 c. 6,00,000 to 10,00,000 d.

Q 7. How much money do you save annually? a. 0 to 25% b. 25 to 50% c. 50 to 75% d. 75% and above

Q 9.What are the various investment options which you invest in? a. Equity b. Mutual Funds c. Commodities d. Derivatives e. Bank Q 10. Objective for Investment? a. High Income c. Future Welfare b. Safety d. Tax Benefit

Q 11. Whose advice do you take before investing in any of the options? a. Family 64 b. Friends c. Consultants/Analysts d. Others.

Q 12. Are you aware of Commodity Market? a. Yes b. No

Q 13.Out of the various options of Commodities you know abouta. Metal b. Agricultural goods ( plantation, spice, oilseed,etc.) c. Crude Oil/Energy d. Bullion e. All Q 14. Do you trade in Commodity? a. Yes b. No

Q 15. If not, what are the reasons that prevent you from doing so. _________________________________________________________________ _________________________________________________________________ Q 16. How long have you been trading in Commodities? a. since 1 year 5 years b. 1 year to 3 years c. 3 years to 5 years d over

Q 16. Frequency for trading a. Daily b. Weekly c. Fortnightly d. Monthly

Q 17. Do you trade in Gold and Silver ? a. Yes b. No

Q 18. Are you a member of any Trading Firm/ Broking house? a. Yes b. No

Q 19. Are you satisfied with the services of your Broking firm? 65

a. Yes Q 20. If not, why?

b. No

_____________________________________________________________________ _____________________________________________________________________ Q 21. Would you recommend investing in Commodities to others? a. Certainly b. Maybe c. Maybe not d. Certainly not.

66

India' CPI Inflation chart

Returns given by various commodities on MCX and NCDEX

67

Gold vs Dollar

Gold vs Dollar
Rs.23,000 Rs.22,500 Rs.22,000 Rs.21,500 Rs.21,000 Rs.20,500 Rs.20,000 Rs.19,500 Rs.19,000 Rs.18,500 Rs.18,000 46.5 46 45.5 45 44.5 44 43.5
Value of Dollar

Gold Price

Gold Spot Dollar vs INR

43 25. Jan. 2011 28. Mar. 2011 30. May. 2011 22. Dec. 2010 24. Feb. 2011 29. Apr. 2011 28. Jun. 2011
Date

Gold Demand

68

Gold Crude Ratio

17 16.5 16 15.5 15 14.5 14 13.5 13 12.5 12 20. Jan. 2011 15. Mar. 2011 9. May. 2011 28. Jun. 2011 22. Dec. 2010 16. Feb. 2011 8. Apr. 2011 2. Jun. 2011 gold crude ratio

Brent Crude vs Silver spot

Rs.80,000 Rs.75,000 Rs.70,000 Rs.65,000 Rs.60,000 Rs.55,000 Rs.50,000 Rs.45,000 Rs.40,000

130 125 120 115 110 105 100 95 90 85 Brent Crude Silver spot

80 21. Jan. 2011 18. Mar. 2011 16. May. 2011 22. Dec. 2010 18. Feb. 2011 18. Apr. 2011 10. Jun. 2011

69

WTI vs NYMEX Crude

WTI crude vs Nasdaq

2450 2400 2350 2300
Nasdaq

120 100 80
WTI crude

2250 2200 2150 2100 2050

60 40 20

WTI Crude Nasdaq

0 24. Jan. 2011 23. Mar. 2011 23. May. 2011 22. Dec. 2010 22. Feb. 2011 25. Apr. 2011 20. Jun. 2011
Date

70