Trends in Commodity Market Project undertaken at Unicon Investment Solution

For the Partial Fulfillment of M.B.A. Programme Of Rajasthan Technical University, Kota(Raj.) (2007-2009)

Submitted by:-

Anup.S.Daultani Pacific Institute of Management (PIM)

(Affiliated to Rajasthan Technical University & approved by AICTE) Post box no. 12 Pratapnagar extension, airport road, Udaipur-313001 Email:pimanagement@rediffmail.com Website: www.pimanagement.org

ACKNOWLEDGEMENT
I would like to express my gratitude to all those who gave me opportunity to complete this project. I would like to thank Operations Department of Unicon Investment Solutions for giving me permission to conduct our research work. I have further more to thank Mr Malay Shah(Vice President), Mr Biren Mehta(Business Head, Commodity, Gujrat) for encouraging me to go head with my project. I would also like to thank Mr. Sunil Parmar (Relationship Manager), Mr. Ankit Patel (Dealer) and all staff members for their stimulating support. I am deeply indebted to my college director Prof. B.P.Sharma Prof. G, M. K. Madnani, Asso.Prof. Shankar Chaudhary, Asso.Prof. Shivom Singh and all the faculty members whose help, stimulating suggestions and encouragement helped me in completing my project. My colleagues in the project supported me in my project work. I want to thank them for all their help, support, interest and their valuable hints. In the end I wish to thank all those whose names have not been mentioned above, but who have directly or indirectly helped in various ways in successful carrying out this project.

PREFACE
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This report is the outcome of the study for internal project during 2007-09 session and has been produced for partial fulfillment of the degree of MASTER OF BUSINESS ADMINISTRATION from PACIFIC INSTITUTE OF MANAGEMENT (Affiliated to R.T.U., KOTA) The topic of the project is Trends in Commodity Market The report commence with general introduction, theoretical background, evaluation of commodity market etc. It covers the information about trends in various commodities listed in different exchanges. The study of the topic is elaborate and strictly confined to the topic. A sincere attempt has been made to highlight all the related areas to make the report explicit, comprehensive and relevant to the topic of study.

EXECUTIVE SUMMARY
The project titled Trends in commodity Market has been carried out at Unicon Investment Solution. The main objective of this project is to know the Awareness of investors such as jewelers, metal traders, farmers and general public about all the recent developments in commodity market and also to know the impact of these developments in commodity market. Unicon operates in various financial products and services like, Consultancy,Stock Broking, Commodity trading, Mutual Fund, Insurance, Property etc The evaluation of financial planning has been increased through decades, which is best seen in customer rise. Now a days investment of saving has assumed great importance. According to the study of the markets, it is being observed that there are a lot of opportunities with investors to get good returns on their investments after investing in the new commodities such as gold guinea, platinum, carbon credit etc.. In near future a proper financial planning is required to invest money in all type of new commodities because there is good potential in market to invest. In this project the great emphasis is given to the investors mind in respect to knowledge about the developments of commodity market where he can maximize his wealth. The needs and wants of the client are taken into consideration.

INDEX: CHAPTER 1 INTRODUCTION AND SCOPE MEANING OF COMMODITY MEANING OF COMMODITY MARKET WHY TO INVEST IN COMMODITY MAJOR COMMODITY EXCHANGES: MCX, NCDEX, NMCE TRENDS IN COMMODITY MARKET GROWTH, SIZE, PERCENTAGE SHARE OFTURNOVER OF VARIOUS EXCHANGES CHAPTER 2 UNICON INVESTMENT SOLUTION ITS PRODUCT AND SERVICES COMPETITORS CHAPTER 3 OBJECTIVE RESEARCH METHODOLOGY CHAPTER 4 DATA ANALYSIS AND INTERPRETATION CHAPTER 5

FINDINGS, CONCLUSION, RECOMMENDATION LIMITATIONS AND REFERENCES.

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Chapter-1 Introduction:

Meaning of Commodity:
Any physical item produced for trade. In futures trading, commodities usually fall into a number of categories, such as wool, grain and other agricultural products, and precious metals such as gold and silver. A commodity is something for which there is demand, but which is supplied without qualitative differentiation across a given market. Characteristic of commodities is that their prices are determined as a function of their market as a whole. Well-established physical commodities have actively traded spot and derivative markets. Generally, these are basic resources and agricultural products such as iron ore, crude oil, coal, ethanol, sugar, soybeans, aluminium, rice, wheat, gold and silver. You may have your debt and equity funds in place, but investing in commodities could just be the one element to improve your portfolio. Commodity trading provides an ideal asset allocation, also helps you hedge against inflation and buy a piece of global demand growth. In 2003, the ban on commodity trading was lifted after 40 years in India. Now, more and more people are interested in investing in this new asset class. While price fluctuations in the sector could get rather volatile depending on the category, returns are relatively higher. However, as this is not a primary area of investment for most, there is a lot of apprehension about when and how to invest. Outlook Money seeks to answer some of these questions and help you assess a whole new turf for making money.

Why invest in commodities?

Commodities allow a portfolio to improve overall return at the same level of risk. Ibbotson Associates, a leading US-based authority on asset allocation estimates that commodities increased returns between 133 and 188 basis points, at no extra risk.

Who should invest?

Any investor who wants to take advantage of price movements and wishes to diversify his portfolio can invest in commodities. However, retail and small investors should be careful while investing in commodities as the swings are volatile and lack of knowledge may result in loss of wealth. Investors must understand the demand cycles that commodities go through and should have a view on what factors may affect this. Ideally, you should invest in select commodities that you can analyse rather than speculate across products you have no idea about. Investing in commodities should be undertaken as a kicker in your portfolio and not as the first destination for your money.

What is commodity trading?

It's an age-old phenomenon. Modern markets came up in the late 18th century, when farming began to be modernised. Though the trade's mechanisms have changed, the basics are still the same. In common parlance, commodities means all types of products. However, the Foreign Currency Regulation Act (FCRA) defines them as 'every kind of movable property other than actionable claims, money and securities.' Commodity trading is nothing but trading in commodity spot and derivatives (futures). If you are keen on taking a buy or sell position based on the future performance of agricultural commodities or commodities like gold, silver, metals, or crude, then you could do so by trading in commodity derivatives. Trading in commodities futures is quite similar to equity futures trading. You could take a long position (where you buy a contract) or a short position (where you sell it). Simply speaking, like in equity and other markets, if you think prices are on their way up, you take a long position and when prices are headed south you opt for a short position.

What do you need to start trading?

Like equity markets, you have to fulfil the 'know your customer' norms with a commodity broker. A photo identification, PAN and proof of address are essential for registration. You will also have to sign the necessary agreements with the broker.

Is there a regulator for the commodity trading market?

The Forward Markets Commission is the regulatory body for the commodity market in India. It is the equivalent of the Securities and Exchange Board of India (Sebi), which protects the interests of investors in securities.

What kind of products can be listed on the commodity market?

All commodities produced in the agriculture, mineral and fossil sectors have been sanctioned for futures trading. These include cereals, pulses, ginned cotton, un-ginned cotton, oilseeds, oils, jute, jute products, sugar, gur, potatoes, onions, coffee, tea, petrochemicals, and bullion, among others.

How big is the Indian commodity trading market as compared to other Asian markets?
The commodity market in India clocks a daily average turnover of Rs 12,000-15,000 crore (Rs 120-150 billion). The accumulative commodities derivatives trade value is estimated to have reached the equivalent of 66 per cent of the gross domestic product and the future will only see the percentage rising, says ICICI direct.com vice-president Kedar Deshpande.

What are the risk factors?

Commodity trading is done in the form of futures and that throws up a huge potential for profit and loss as it involves predictions of the future and hence uncertainty and risk. Risk factors in commodity trading are similar to futures trading in equity markets. A major difference is that the information availability on supply and demand cycles in commodity markets is not as robust and controlled as the equity market.

What are the factors that influence the commodity prices in the market?
The commodity market is driven by demand and supply factors and inventory, when it comes to perishable commodities such as agricultural products and high demand products such as crude oil. Like any market, the demand-supply equation influences the prices. Variables like weather, social changes, government policies and global factors influence the balance.

How to keep updated?

Most commodity trading firms have a research team in place that prepares commodity charts and conducts detailed study on the trends of the commodity in question. 8

Investing strategies based on this research are usually provided to clients. They usually provide daily market reports before the market opens and intra-day calls during trading hours, along with monthly and weekly research reports

What are the trading hours?

Commodity Exchanges (MCX and NCDEX) function from 10.00 am to 11.55 pm (Agricommodities up to 5 pm only) from Monday to Friday. On Saturday the trading hours are 10.00 am to 2.00 pm.

Do physical deliveries happen in commodity futures exchanges?

The exchanges, in order to maintain the futures prices in line with the spot market, have made available provisions of settlement of contracts by physical delivery. They also make sure that the futures and spot prices coincide during the settlement so that the fair price discovery mechanism is in place.

Is delivery mandatory in commodity futures contract trading?

It's not mandatory. However there is always a provision for delivery in commodity futures trading to ensure that the future prices are in conformity with the underlying. The right for delivery is normally with the seller; the buyer/seller has to express his intention for delivery about five to seven days before the expiry. However provisions vary from exchange to exchange and commodity to commodity. The market lot for delivery is different for few commodities (higher than the trading lot). The contracts that are not assigned for delivery will be settled in cash.

Which are the major commodity exchanges in India?

There are 24 commodity exchanges in India. There are three national level commodity exchanges to trade in all permitted commodities. They are: -

Multi Commodity Exchange (MCX):

MCX: refers to Multi Commodity Exchange which facilitates trading in a variety of commodities in the country. This is an independent commodity exchange operating in India with its base in Mumbai. The MCX was established in the year 2003 with NABARD, NSE, Financial Technologies India Ltd, Corporation Bank, Bank of India, Bank of Baroda, HDFC Bank Ltd, SBI Life Insurance Corporation Ltd, Fid Fund (Mauritius) Ltd etc. as key share holders. MCX reaches out to 500 Indian cities with about 10000 trading terminals. MCX is the only market in India where multiple commodities are traded. MCX is engaged in future trading in a number of commodities like agricultural commodities, Bullion, Ferrous and Non Ferrous metals, Pulses, Oil and Oil Seeds, Energy, Plantations, Spices and soft commodities. The average daily turnover of MCX is about 1.55 billion US Dollars. MCX captures almost 72% of the market share and thus it occupies No1 position in India in the commodity market. MCX occupies no 1 position in the world in respect of silver, No 2 position in Natural gas and No 3 position in crude oil and gold. The exchange's competitor is National Commodity & Derivatives Exchange Ltd. With a growing share of 72%, MCX continues to be India's No. 1 commodity exchange. Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold in futures trading . MCX has 10 strategic alliances with leading commodity exchange across the globe. The average daily turnover of MCX is about US$ 2.2 billion. MCX now reaches out to about 500 cities in India with the help of about 10,000 trading terminals. MCX COMDEX is India's first and only composite commodity futures price index. MCX works in joint venture with National Spot Exchange, a purely agricultural Commodity Exchange for the standardization in agricultural markets. It also works in conjunction with National Bulk Handling Corporation which helps farmers in bulk handling of agricultural commodities. MCX has also set up a management course i.e Diploma in Commodities Market in cooperation with Welingkar Institute of Management to train young managers deal efficiently in the commodities market.

Key Shareholders:
Financial Technologies (I) Ltd., State Bank of India and it's associates, National Bank for Agriculture and Rural Development (NABARD), National Stock Exchange of India Ltd. (NSE), 10

Fid Fund (Mauritius) Ltd. - an affiliate of Fidelity International, Corporation Bank, Union Bank of India, Canara Bank, Bank of India, Bank of Baroda , HDFC Bank and SBI Life Insurance Co. Ltd., ICICI ventures,

LIST OF VARIOUS COMMODITIES TRADED ON MCX

MCX Code GOLD GOLDM SILVER SILVERM Crude Oil Copper Zinc Natural Gas Aluminium Kapas Kapas khali Rubber Cofrob Potato Potatotrwr Cardamonm Nickel Mentha oil Name Gold Gold Mini Silver Silver Mini CrudeOil Copper Zinc Natural Gas Aluminium Kapas Kapas khali Rubber Coffee robusta Potato Potato Tarkeshwar Cardamom Nickel Mentha oil Price quot. 10 gm 10 gm 1 kg 1 kg 1 bbl 1 kg 1 kg 1 mmbtu 1kg 20 kg 50 kg 100 kg 100 kg 100 kg 100 kg 1 kg 1 kg 1 kg Lot size 1 kg 100 gm 30 kg 5 Kg 100 bbl 1 ton 5 ton 500 mmbtu 2 ton 4 ton 5 ton 1 ton 1 ton 3 ton 3 ton 100 kg 250 kg 360 kg 1 Rs. 100 10 30 5 100 1000 5000 500 2000 200 100 10 10 300 300 100 250 360 P/L

NCDEX:
NCDEX: NCDEX stands for National Commodities and Derivatives Exchange Ltd. The aim of the company is to make forward contracts simple, safe and secure. NCDEX is a public limited company incorporated on 23.4.2003 under the Companies Act, promoted by national level financial institutions like ICICI Bank, LIC, NABARD, NSE, Canara Bank,

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CRISIL, Goldman Sachs, IFFCO and PNB with an aim to bring in standardization and professionalism in forward contract and also to bring in security to the producers. They hold equity shares in the NCDEX. The NCDEX offers many benefits. The promoters of the company are financial institutions with long standing, experience and expertise in the field of financial dealings and contracts. So they bring in experience, trust, nation wide reach, technology and risk management skills. The NCDEX is a national level, on line commodity exchange and its speciality is that it is a technology driven exchange market. NCDEX is located in Mumbai and has 550 centres all over the country. NCDEX trades in 57 commodities like agricultural commodities, Precious metals, Base metals, Ferrous metals, Energy, polymers etc. NCDEX offers a platform for market participants to trade in commodities and derivatives under sound global practices and on a wider canvas. Another important feature of NCDEX is its transparency. The NCDEX website gives trend analysis and the prices of the various commodities traded on a daily basis. This provides for good knowledge of the prices for all the parties involved. NCDEX is regulated by the Forward Markets Commission and is governed by the Forward Contracts Regulation Act, the Indian Companies Act, The Stamp Act and the Indian Contract Act. While MCX also exists for future trading in multiple commodities, the NCDEX is an online corporate market. The NCDEX is also taking initiative to train the farmers through commodity exchanges

LIST OF VARIOUS COMMODITIES TRADED ON NCDEX

NCDEX

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Code CASTORDSA CHARJDDEL CHLL334GTR COCUDCAKL GARGUMJDR GARSEDJDR GURCHKMZR JEERAUNJHA KAPASSRNR MAIZYRNZM POTFAQDEL PPRMLGKOC RMSEEDJPR SUGARMMZR SYBEANIDR SYOREFIDR TMCFGRNZM TURDESAKL URDDESJAL WHTSMQDELI

Name Castor Seed Chana Red Chilli Cottan Oil Cake Gar Gum Gar Seed Gur Jeera Kapas Maiz Potato Black Pepper Rape Muster Seed Sugar M Grade Soyabeen Refine Soy Oil Turmeric Tur Dal Urad Dal Wheat

Local Name Erandiyu Chana Marachu

Price quot. 20 kg 100 kg 100 kg 50 kg 100 kg 100 kg 40 kg 100 kg 20 kg 100 kg 100 kg 1000 kg 20 kg 100 kg 100 kg 10 kg 100 kg 100 kg 100 kg 100 kg

Lot size 10 ton 10 ton 5 ton 10 ton 5 ton 10 ton 10 ton 3 ton 4 ton 10 ton 15 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton 10 ton

1 Rs.P / L 500 100 50 200 50 100 250 30 200 100 150 10 500 10 100 1000 100 100 100 100

Makai Batata Mari Rai Khand

Haldar Tuver Adad Ghau

National Multi Commodity Exchange of India Ltd, Ahmedabad (NMCE) www.nmce.com

It is the first de-mutualised electronic multi-commodity Exchange of Agricultural Co Operative Marketing Federation of India Limited (NAFED), Gujarat Agro Industries Corporation Limited (GAIC) and Punjab National Bank (PNB).

Trends in Commodity Market

Market trends are described as sustained movements in market prices over a period. Indian commodity market which expanded by 50 times in a span of 5 years from Rs.66530 crore in 2002 to Rs.3,3753,36 crore in 2007, is now expected to grow at a steady speed of 13

about 30% by 2010 and touch a volume of Rs.74,156,13 crore since peoples participation in such trade would continue, according to findings of the ASSOCHAM. In 2003, the size of commodities trade stood at Rs.129364 crore which thereby went to Rs.571759 crore in 2004, recording an increase of 341%. In 2005, the growth in commodities trade was by 276% as it went up at Rs.2,155,122 crore. However, in 2006, though the commodities trade increased to Rs. 2,739,340 crore, it could register year on year growth of 27% over the last year. For 2007, the trade in commodity reached at Rs.33,753,36 crore and registered a growth of 23%, say the ASSOCHAM findings. Releasing the ASSOCHAM estimates, its President, Mr. Sajjan Jindal said that the growth in commodities derivatives trading which was at massive level in the last five years would now grow by about 30% to reach projected level of Rs.7415613 crore in next 2 years. The turnover as proportion to GDP of commodity trade increased from 4.7% in 2004 to 20% in 2007 and is expected to go up many folds since commodity markets would remain friendly to its subscribers. The daily average volume of trade in commodities exchanges by December 2007 was over Rs.12,000 crore, said Mr. Jindal. Gold, silver and crude recorded the highest turnover in MCX while in NCDEX, soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend is likely to continue. Interestingly, trading volumes in the Indian commodity market have also seen a steady rise -- from Rs 1,29,000 crore in financial year 2004 to Rs 5,71,000 crore in FY 2005 and well past that in FY 2006. Commodity trading in India, which was banned in the 1960s, resumed in 2003 through the Multi-Commodity Exchange of India -- MCX -- and the National Commodity and Derivatives Exchange -- NCDEX. The former is slated to hit the Indian markets shortly with an Initial Public Offering.

Excessive liquidity and benign interest rates have been vital for such growth in the two markets in India. The current huge investments in the commodity market by dedicated and hedge funds were not there earlier. Furthermore, a boom in construction and infrastructure activity fuelled interest in steel and other base metals in rapidly growing economies such as India and China, resulting in a surge in interest in the Indian commodity market.

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...Herein lays the cyclical nature of trends in the commodity markets. Supply response is inadequate while demand is insatiable...
Herein lies the cyclical nature of trends in the commodity markets. Supply response is inadequate while demand is insatiable. The low oil prices that persisted from the mid-1980s led to a serious under-investment in the long-term infrastructure for oil exploration, production, shipping and refining. Oil tanker capacity peaked in the late 1970s, while refining capacity and oil-rig numbers reached maximum levels in 1981. There was little incentive to maintain expensive spare capacity thereafter. But all of a sudden, it seems, demand for energy has gone through the roof. The big injection of demand has come from China - which last year overtook Japan as an oil importer - and, to a lesser extent, India. The world currently produces 84 million barrels per day. In 10 years time, demand could be 60 mbd higher than it is now. Meantime, North Sea and US production are past their peak, and the worlds biggest oil field, Ghawar in Saudi Arabia, is not producing what it once was. The last elephant oil field - one that contains more than a billion barrels of oil - was discovered as long as 20 years ago. Oil prices peaked at $40 a barrel in 1980, which in real terms is equivalent to $90 a barrel. . Meanwhile, port operators are expanding loading bays to keep pace with the surge in shipping traffic. These are clearly physical, as opposed to just speculative, manifestations of a genuine commodity-price boom.

Commodity markets: global trends, local impacts

Least-developed countries most vulnerable to price declines Long-term trends, short-term shocks and price spikes in agricultural commodity markets aren't just arcane macro-economic phenomena -- they have very real impacts on the day to day lives of people everywhere. Not only do they affect the price people pay for food and clothing, they can have a larger impact on the overall economic well-being of families, communities -- even entire countries -- that are dependent on commodity exports for cash 15

earnings. According to a new FAO report, The State of Agricultural Commodity Markets (SOCO), the impact of commodity price fluctuations is greatest in the poorest countries of the developing world. "An estimated 2.5 billion people in the developing world depend on agriculture for their livelihoods," SOCO points out. And, according to the report, in the second half of the 1990s prices of several commodities exported by developing countries fell to their lowest levels since the Great Depression. Overall, real prices for all agricultural commodities have declined over the past 40 years, but the rate of decline has varied from commodity to commodity. Raw materials, tropical beverages, oil crops and cereals have experienced the steepest declines, SOCO observes. The real price decline for horticultural products, meat and dairy goods has not been so dramatic.

Turnover of Indian Commodity Exchanges :

Indian Commodity Futures Market (Rs Crores) Exchanges 2004 2005 2006 Multi Commodity Exchange (MCX) 165147 961,633 1,621,803 NCDEX 266,338 1,066,686 944,066 NMCE(Ahmadabad) 13,988 18,385 101,731 NBOT(Indore) 58,463 53,683 57,149 Others 67,823 54,735 14,591 All Exchanges 571,759 2,155,122 2,739,340 2007 2,505,206 733,479 24,072 74,582 37,997 3,375,336

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Turnover of commodity futures by various countries

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Trends in various Commodities::

The week that went by was eventful on many counts for the Indian commodities sector. The fall of crude oil is indeed a relief for a country facing inflationary pressure since the beginning of the year. Gold prices remained steady despite the lower demand from jewellery sector. Anxiety over the lower rainfall so far is impacting the markets of agricommodities whose spot and future prices are reflecting this concern for several key commodities including sugar. Globally, investors flocked into commodities earlier this year as a hedge against inflation and the weak dollar, but analysts say they have begun to unwind those positions over the past two weeks.

Crude Oil:
Crude futures declined to seven weeks low on increasing worries that economic slowdown will lead to lower demand for oil. Recovery in dollar after some initial weakness also pressured the oil prices. The most active September delivery crude oil futures on NYMEX shed $2.23 or 1.8% to settle at $123.26 a barrel. Crude oil futures suffered a weekly loss of 4.8%. Crude oil prices weakened as recovery in dollar pressured the prices. Fuel consumption in the United States and other industrialized nations has begun to slide, dragging oil down from record peaks over $147 a barrel on July 11. The US currency recovered after some initial weakness on positive economic data. Oil industry consultancy Petro Logistics Ltds preliminary estimates stated OPEC will increase production by 32.9 million barrel per day in July against that produced in June. In Asia, high crude oil prices are cutting fuel consumption. Japans crude oil imports fell for the first time in past nine months. Fuel consumption in South Korea decreased for the eighth straight month in June leading to downward pressure on crude prices in the short-term and the trend might continue in the week ahead.

Gold:
After losing more than Rs 700 in the mid-week, gold limped back to green zone during the weekend in the domestic markets as investors returned to market and a firm note from international markets. In Mumbai, the major hub of gold in India, standard and pure gold recorded a smart gain of Rs 130 each to Rs 12,760 and Rs 12,825 per 10 gm respectively. Reports that the yellow metal registered a positive trend in London market for the first time in three days in expectations of a slide in dollar value has triggered fresh bout of speculative buying in local markets. Gold for August delivery rose $1.80 to $924.60 an ounce on the Comex division of the New York Mercantile Exchange. The gain was shortlived as fund selling and recovery of

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dollar, fresh slide in oil prices pushed gold down to $921 levels for delivery. Indian market remained quite immune to these trends. Further downward correction in gold prices as a result of lower crude price can be expected as both of them move in tandem. Gold is likely to test $900 mark if oil continues to languish. Weak oil and strong dollar are negative factors for gold prices.

Base Metals::
Last weeks trade in base metals was volatile on the back of currency movements and impact of US macroeconomic data. Major concerns over slowdown in demand from the US affected base metal prices. With the strengthening of the US Dollar, base metals looked unattractive for holders of other currencies. Copper prices are facing pressure on the downside due to a slowdown in physical buying from China as prices were quoting at $8,000 levels. Chinese physical buying is expected to pick up when copper prices come below the psychological $8,000 mark. In the last week, we had expected copper prices to come below $8,000 levels and trade between $7,750-$7,900 with major resistance at $8,000. Though there are a few fundamental reasons for copper to bounce back, we foresee a cooling in prices in the coming week and expect copper to trade between $7,750-$7,900. Lead prices have been gaining on the back of news that Chinese production of lead had declined due to maintenance work. Reports also suggested that Chinas first-half refined lead exports were 80% lower than a year earlier. Another factor that pushed prices higher was that LME inventories for lead have declined 10% this month from a two-year high at the end of June. In the coming week, we foresee a lot of volatility in base metals and currency movement will play a crucial role in determining prices.

Guar:
Guar prices remained under pressure and registered a sharp fall of Rs.150-200/qtl in the spot as well as futures market. Uncertainty over the farm futures along with positive rain forecast by the Met department added to the bearish sentiment. Although FMC chief denied all the possibilities of ban in farm futures, then too prices tumbled down across the Guar growing regions on better crop prospects. Appreciation in INR is also one of the major factors for the drastic fall in the last week, which might also support the fall in the coming week. Rupee appreciated by Re. 1 per dollar in the last 5-6 days. This may once again keep the exporters sidelined as it would eat their margins. The overall trend in Guar in the short as well as medium term would depend on the rainfall. Also, we have to keep a close watch on INR movement as it will impact the exports from India.

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Jeera:
Jeera prices in the spot market were quoted at firm rates in the beginning of the week but declined on Thursday tracking futures. Reports of a likely ban on Agri Futures led a fall in all commodities. Demand from the overseas have reduced marginally but is expected in the coming days. Indian Jeera at the international market is quoting at around $3000/tonne and Syria at around $3400-$3600/tonne. However, there are reports that China is offering its stocks at lower levels of $2800/tonnes. Stocks at the domestic as well as global level are standing at lower levels. Thus in long term the trend is still bullish. NCDEX Jeera September contract may find an initial support at 13190 and thereafter at 12870. Resistance can be seen at 13640 and 12930. Meanwhile, towards the week end, Jeera futures have recovered marginally on profit booking at NCDEX.

Sugar:
Steady trend was visible in sugar spot prices on improved buying support in the domestic market while supplies were lower.But in Maharashtra, prices remained subdued on dull demand amidst rumours that the government may provide extra quota of 2-3 MMt. Generally demand remains poor during end of the month and regains by start of the month. Besides, good physical demand for the coming festival and marriage season is expected to provide support in the coming months. Deficient rains in Southern India and West India could lead to upward movement of sugar prices. Prices first reaching and then breaching Rs 2,000 a quintal is on the cards. Expect sugar exports to be highly restricted or even banned. Acreage has fallen more than 18% to 4.32 million hectares till July 18. Sugar production in the coming crop year that begins in October that is expected to sharply decline to 20 MMt, industry sources said. In addition, exports are likely to increase to 4.2 MMt compared to about 1.7 MMt in the previous year. India has already shipped 3.6-3.7 MMt so far. Despite ample stocks and sluggish demand presently, prices are likely to be steady to better during festivals and later in the coming sugar season. Next week sugar is likely to see a firm trend with downward movement towards weekend.

Crud:e Palm Oil

Palm oil traded mixed following the weakness in CPO futures at BMD and domestic exchange. Palm oil demand weakens during rainy season as it solidifies at low temperatures. Demand is sluggish around current levels as further decline in prices is expected in near -term. Crude palm oil futures on BMD closed lower negating the recovery in soy oil at CBOT and crude oil futures. Supportive export data for the first 25 days of July also could not lend much support to the market. Bullish exports are not sufficient to offset the piling stock levels in Malaysia.

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Domestically, lower oilseeds output is likely to reduce the availability of edible oils; and if lower carry-in of rapeseed/mustard is also considered, the countrys additional vegetable oil import requirement would expand by nearly 10-12 lakh tonnes from the current level of around 6 million tonnes, for the ensuing oil year 2008-09. Outlook remains bearish in near term following expectation of rains in certain oilseeds growing regions during next one week and weak global cues. Technical analysis shows CPO prices to remain weak and likely to record further lows.

Black Pepper:
Indias black pepper is facing tremendous competition from arch rival Vietnamese pepper. Already there is a price differential of $200 per tonnne that is weaking the demand for Indian pepper.Vietnam being the largest producer of black pepper in the world has always been a volume player in the global market. This has always given it the advantage of outbidding others in this mart. In case of India, the competition between the two has been at the low-end of the spice market. Indian exporters see no chance of narrowing down this $200 per tonne price differential in the near future due to supply constraints. Firstly, Indias entire pepper production this year is estimated at 50,000 tonne, half Vietnams production. In the domestic spot markets the sentiments were weak despite the underlying buying interest witnessed at the terminal markets especially from the buyers at the primary market. The traders are seen averaging out at the prevailing levels. The garbled berries were quoted Rs.100/qtl down at Rs.14300/qtl in comparison with prior trading session. Around 12 tonnes were sold for the arrivals of 18 tonnes. Internationally, Vietnam offered $100/tonne down and VASTA was quoted at $3200/tonne fob while 500 gl at $2800/tonne. Indian parity was offered at $100/tonne down at $3400/tonne fob. The prevailing price level is likely to attract fresh buying interest amongst the domestic grinders during the days ahead. Pepper futures staged a recovery in the weekend after losses during the mid-week.Bearish trend is expected in the near term although medium term-outlook is attractive.

Rubber
Natural Rubber in Tokyo rose to a ten-day high while in Kerala markets it rose to an all time high during the previous week even as crude oil prices fell. Despite a recent fall in prices concern over supplies of the commodity led to upward movement of prices.Natural rubber futures in Tokyo rose the most in 10 days as some investors deemed yesterdays fall to a seven-week low was overdone on signs supplies of the commodity remain tight. This concern was evident in the gain in the expiry price at Tocom which expired at 0.8

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percent higher than the previous day. During mid-week, rubber prices touched an all-time high of Rs 137 for benchmark grade RSS-4 , surpassing the previous high of Rs 136 quoted in May this year. Rubber could go beyond Rs 140 but for the weaker trends in Tocom and Bangkok. This could encourage import rather than export of rubber from India. According to leading dealers in Kerala, the prices were bound to cross Rs 140, but the slowdown in the global market affected the sentiments of the domestic market. Although production is in full swing in most of the rubber plantations of the state, supply to terminal markets such as Kochi and Kottayam is limited even with the high prices. Traders say that rubber is being stocked on anticipation that prices may touch Rs 150 a kg, which explains the current short supply. Production was up by 23.8 per cent in Q1 at 1,77,750 tonnes while consumption registered a growth of 6.4 per cent.

Maize
Global maize/corn production for 2007-08 is projected higher by 1.1 mt at 769.31 mt this month with increases for Canada, EU-27, and FSU (former Soviet Union)-12. As crude oil prices march closer to the $100 a barrel mark, alternative fuels will attract more interest in the days to come. As corn is used to process bio-diesel, the demand for corn is only going to increase. We continue to view corn as positive, but only modestly undervalued, the Kotak report.

Oilseeds & edible oils

Possibility of a lower rabi oilseed crop for 2008 in India could aid bullish sentiments. As per the data released by the Government, oilseed acreage as on December 14 for the rabi season 2007-08 stood at 7.7 million ha, down 11 per cent from a year ago. Although the Government has set the minimum support price for rapeseed at Rs 1,800 per quintal, it might not be sufficient for Nafed to procure mustard this year. Currently the prices are ruling above Rs 2,300 per quintal, the Kotak report said. The decline in mustard seed production and lower carryover stocks could lead to lower availability of domestic oil. The dependence on imports is expected to increase for the next year. India has already imported around 38 per cent more oil in November 2007 compared with last year, despite a higher soyabean crush activity is a cause for concern. The Indian edible oil imports could touch more than 5 mt this season against 4.7 mt.

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Cardamom
Incessant rains in Kerala have delayed the harvest of cardamom. In addition, crops are infected by fungus due to rains. The cardamom production is expected to be 25 per cent lower at 9,000 tonnes compared with 11,235 tonne last year. With Indian cardamom demand-supply situation being tight, our price outlook remains positive for 2007-08, Kotak said.

Turmeric
Acreage under turmeric is expected to be down by 10-15 per cent compared with last year due to lower price realisation for farmers in the current season. But the lower acreage would be set off by the high carryover stock of around 1-1.2 million bags. Prices are expected to trade firm in the short term. Production this year is expected around 4-4.2 million bags compared with 5.2 million bags of last year, Kotak said.

Growth in commodity markets:

Investment in commodity markets has undoubtedly grown, but commentators found it difficult to quantify. Even the larger market participants that we spoke to were unable to accurately gauge the total size of the market, and estimates varied widely. There was a similarly wide range of estimates regarding the breakdown of investment by market sector. On-exchange volumes have certainly increased greatly in the past five to ten years. There has been rapid growth in the number of contracts traded on both LIFFE (soft commodities) and ICE Futures (energy). ICE Futures has seen volumes almost double in the last year alone and volumes on LME have increased tenfold since 1990.14 However in some markets OTC business is equal to several multiples of these volumes. The December 2006 Bank for International Settlements (BIS) Quarterly Review includes data on the amount of outstanding OTC commodity derivatives contracts among those who report. Figure 6 shows that this market too has increased greatly in recent years.

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Commodity market to reach $1.73 trillion by 2010:

New Delhi, June 15 (IANS) The Indian commodity market is expected to grow by 30 percent and will reach Rs.74,156 billion ($1.73 trillion) in volume by 2010, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham). Assocham found that the Indian commodity market expanded 50 times in a span of five years from Rs.665.3 billion in 2002 to Rs.33,753 billion in 2007 as peoples participation in such trade continued to grow. The growth in commodities derivatives trading would now grow by about 30 percent to reach a projected level of Rs.74,156 billion in the next two years, said Assocham president Sajjan Jindal. The turnover in proportion to GDP of commodity trade increased from 4.7 percent in 2004 to 20 percent in 2007 and is expected to go up many-fold since commodity markets would remain friendly to subscribers. The daily average volume of trade in commodities exchanges by December 2007 was over Rs.120 billion, said Jindal. Gold, silver and crude recorded the highest turnover in Multi Commodity Exchange (MCX) while in National Commodity & Derivatives Exchange Ltd (NCDEX), soya oil, guar seed and soyabean and in NMCE pepper, rubber and raw jute were the most actively traded commodities on an average. This trend is likely to continue, he added. The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. It also noted that Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. Some of the major problems associated with commodity markets in India include infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges and integration of spot and futures markets, the study said. To attract active traders to commodity futures, the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers, imposing capital adequacy norms and defining qualification criteria, it noted. For a vibrant futures market, it is imperative that commodity pricing be left to market forces, without monopolistic government control. However, in India, scores of commodities in which futures trading is permitted are still protected under the Essential Commodity Act, 1955.

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Chapter -2 Description of the Organization ,its products and its competitors.

Unicon has been founded with the aim of providing world class investing experience to hitherto underserved investor community. The technology today has made it possible to reach out to the last person in the financial market and give him the same level of service which was available to only the selected few. We give personalized premium service with reasonable commissions on the NSE, BSE & Derivative market through our Equity broking arm Unicon Securities Pvt Ltd. and Commodities on NCDEX and MCX through our Commodity broking arm Unicon Commodities Pvt. Ltd. With our sophisticated technology you can trade through your computer and if you want human touch you can also deal through our Relationship Managers out of our more than 100 branches spread across the nation. We give personalized services on Insurance (Life & General) & Investments (Mutual Funds & IPO's) needs, through our Insurance & Investment distribution arm Unicon Insurance Advisors Pvt. Ltd. Our tailor-made customized solutions are perfect match to different financial objectives. Our distribution network is backed by in-house back office support to serve our customers promptly.

Mission :
To create long term value by empowering individual investors through superior financial services supported by culture based on highest level of teamwork, efficiency and integrity.

Vision :
To provide the most useful and ethical Investment Solutions - guided by values driven approach to growth, client service and employee development.

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Products and Services:

Unicon customers have the advantage of trading in all the market segments together in the same window, as we understand the need of transactions to be executed with high speed and reduced time. At the same time, they have the advantage of having all Advisory Services for Life Insurance, General Insurance, Mutual Funds and IPOs also. Unicon is a customer focused financial services organization providing a range of investment solutions to our customers. We work with clients to meet their overall investment objectives and achieve their financial goals. Our clients have the opportunity to get personalized services depending on their investment profiles. Our personalized approach enables clients to achieve their Total Investment Objectives.

Our key product offerings are as follows:

COMMODITY EQUITY DEPOSITORY PRIVILEGED CLIENT GROUP DISTRIBUTION PROPERTIES NRI SERVICES BACK OFFICE

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COMMODITY:
Unicon offers a unique feature of a single screen trading platform in MCX and NCDEX.Unicon offers both Offline & Online trading platforms. Online Commodity Internet trading Platform through UniFlex.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Live Market Watch for commodity market (NCDEX, MCX) in one screen. Add any number of scrips in the Market Watch. Tick by tick live updation of Intraday chart. Greater exposure for trading on the margin available Common window for market watch and order execution. Key board driven short cuts for punching orders quickly. Real time updation of exposure and portfolio. Facility to customize any number of portfolios & watchlists. Market depth, i.e. Best 5 bids and offers, updated live for all scripts. Facility to cancel all pending orders with a single click. Instant trade confirmations. Stop-loss feature.

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EQUITY
To know Unicon offers a unique feature of a single Screen Trading Platform of NSE , BSE & Derivatives. Unicon offers both Offline & Online trading platforms. Online Trading Products :

Unicon Plus:
Browser based trading terminal that can be accessed by a unique ID and password. This facility is available to all our online customers the moment they get registered with us.

Unicon Swift
Application based terminal for active traders. It provides better speed, greater analytical features & priority access to Relationship Managers

Unicon Depository Services

It offers dematerialization services as a participant in Central Depository Services Limited (CDSL), through its Depository operations. The company believes in efficient and costeffective and integrated service support to its brokerage business. Unicon Securities Private Limited, as a depository participant, will offer depository accounts for individual investors as well as corporates which will enable them to transact in the dematerialized segment, without any hassles. Depository offer a safe, convenient way to hold securities as compared to holding securities in paper form. Our service provides an integrated single platform for all our clients ensuring a risk free, efficient and prompt depository process Facilities Offered by Unicon * De-materialization: You can submit your physical shares at the Unicon branch for dematerialization into electronic form. * Re-materialization: You can also request for Re-materialization which enables you to convert the dematerialized shares into physical form.

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* Transfer: Inter and intra depository services are available through which you can transfer shares. * IPO: You can apply for IPO using your demat account details and on allotment the securities are transferred directly to your demat account. * Corporate Actions: While holding your stock in demat account, in case you are eligible for any bonus and rights issues the allotment would be transferred to your demat account. * Easi: You can view your demat account over the Internet and avail a host of services. This facility empowers our clients to view, download, print updated holdings with respective valuations.

PRIVILEGED CLIENT GROUP:

We provide customer focused transparent investment planning and solutions. We offer services which benefit your special status. PCG has a specialized advisory team which nurtures all your investment. We ensure that your investments work for you rather than you for them

DISTRIBUTION
Unicon is fast emerging as a leader in the Insurance and Mutual Funds distribution space. Unicon has over 100 branches and a huge number of Business Development Executives who help to source and service the customers throughout the country. Unicon is fast becoming the preferred Vendor Independent distribution houses because of providing efficient service like free pick-up of collection of cheques, DDs, Keeping track of the premiums etc to its customers.

Unicon offers the following distribution products: IPO's Mutual Funds Insurance

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IPO:
At Unicon you can invest in the Primary markets (Initial Public Offerings) online without going through the hassles of filling up any IPO application forms or any other paperwork. We shall make sure that you do not miss the opportunity to subscribe/invest in a good IPO issue by providing you an online IPO application form, transfer of funds online through secured payment Gateways of leading banks like ICICI, HDFC, AXIS bank. In addition to the above we shall provide you with the In-Depth analysis of the IPO issues which shall be hitting the Indian Markets in near future, IPO Calendar, analysis on the recent IPO listings, prospectus, offer documents and other IPO research reports so as to help you take an informed decision to invest in the IPO issues. Online IPO facility is open to all our registered clients at no cost whatsoever. All you need is the following to subscribe online to the IPO issues: A trading account with Unicon A Demat account with Unicon An access to the net banking facility with the Banks through which Unicon has operational Gateway facility (ICICI, HDFC and AXIS Bank). You must have signed a Power of Attorney (POA) agreement for applying in IPOs online.

MUTUAL FUNDS:
Unicon Provides expert advice to its clients for their investments in equity & debt markets through Mutual Funds. Our experts advice you the best investment solutions that suit you and help you to reach your financial goals. We help you ascertain your risk profile & guide you with the right product mix which reduce your tax liability increase your savings & enhance your wealth. Weather you have a conservative, medium or aggressive investment risk appetite, our experts would guide you to build a portfolio to optimize the return of interest.

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INSURANCE:
General Insurance: Unicon offers all products of General Insurance under one umbrella. Unicon comprises of a team of distinguished professionals from insurance, finance and other management disciplines who have vast business & managerial experience. Unicon team evaluates the client's business environment and studies the risk profile. based on the results of these evaluations, Unicon team then suggests the most cost effective , integrated insurance package that is perfectly suited to the client's risk profile. Unicon has a nationwide network of branches all over India, equipped with top quality infrastructure facilities, to provide you prompt & efficient service. Life Insurance : Unicon offers you a Peace of Mind by offering various life insurance plans for your unique & specific needs. Our philosophy is that for every financial problem, there is a solution also. And we are here to give you complete financial solutions. At the same time we offer you very Prompt & Reliable Policy related service for enduring relationship. We offer a very wide range of products to fulfill your particular requirements. You can always have an access to our 83 Branch Offices situated at prime locations of the city, or you can call our Relationship Manager to guide on your Investments.

Following is the glimpse of Life Insurance Plans: Protection Plans Investment Plans Child Plans Retirement/Pension Plans Saving Plans NRI Plans Health Plans

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PROPERTY:
Unicon is a specialized property broking company. Our highly experienced and professional teams, present retail, office, industrial and residential property opportunities to a broad base of clients. Whether it is a residential or commercial development, Unicon offers a total solution to our clients inclusive of market research, marketing strategy, interaction with the professional teams and sales or leasing of the property. Unicons professional team of consultants will assist you to identify suitable premises that satisfy your requirements. We will help you negotiate favorable leases and assist with the preparation of all documentation. Whether you are looking for a home or a place to conduct business Unicon shall find you one

NRI SERVICES:
India becoming the epicentre of growth the Global Indian feels the need to be connected to the domestic growth story. Unicon now offers a convenient and hassle-free way of Investing in the Indian Securities Market to the people who are living outside India and wish to participate in the Indian Growth story. Procedure for NRI operations in Indian Capital Markets:The NRI can deal with only one bank at any point of time. He is allowed to invest only 5% of the paid up capital of a company. The aggregate paid up value of equity of any company purchased by all NRI's and OCBs cannot exceed 10 percent of the paid up capital of the company and in the case of convertible debentures, the aggregate paid up value of each series of debentures purchased by all NRI's and OCBs cannot exceed 10 % of the paid up value of each series of convertible debentures. He can enter only into delivery based trades, all deliveries must only be routed through beneficiary accounts and not directly through the broker. Shares bought by him cannot be sold unless the payout of the same is received from exchange. All purchase and sale transactions have to be reported to the RBI by the designated bank. Original brokers contract notes have to be submitted to the designated Bank branch, within 24 hours of the transaction.

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He will be required to make bill to bill payments/ settlements. No adjustments of purchase against sale consideration should be done. Shares cannot be bought against the shares sold in the same settlement. All Purchase and Sales will be dealt separately for payments / receipts. Sale proceeds of any transaction not reported/approved by the RBI is allowed to be credited to the NRE/NRO savings/demat account. The transaction will have to be reversed in the account and losses if any will be borne by the client. All tax liabilities arising out of buying and selling of securities will be handled by the designated bank.

BACK OFFICE:
Unicon through its online back-office aims to increase the transparency and provides you the link to view the details of your account online anytime and anywhere. Here are the advantages of viewing the following reports online: Sauda Details Financial Ledger Net position for the day Net position Detail (for the complete financial year) E-Contract Note

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ASSOCIATES
Unicon Investment Solutions is one of the most revered financial services company in the market place. We are determined to provide the entire basket of investment solutions to our clients. Our name is backed by high caliber human resource and state-of-the-art infrastructure, all of which combine together to make what UNICON is today We have a nationwide network with over 105 branches. We have a strong team of over 250 Business Partners who are assisting us to tap the retail & corporate clientele throughout the country. Presently we have 45,000 individual/ corporate/ HNI & NRI clients. We are member Brokers for BSE/ NSE/ NCDEX/ MCX. Appreciating the increasing needs and demands of our clients and the market, we are committed and dedicated to give our best services to them.

Indian economy is riding high enjoying 8% growth rate; and the industrial and agricultural sectors are doing well. We are also enjoying favourable foreign exchange balances. Even so, the producer or the farmer does not get his due for a host of reasons. One among them is the middlemen and mediators trying to hoodwink the producer about the reasonable price and the producers inability to wait for the right price for lack of infrastructural facilities. Though there is a spot market for many commodities to secure immediate price, it always results in the producer settling for a loss. Similarly even if a farmer waits for a futures contract to get a reasonable price, his ignorance of the market puts him in a disadvantageous position. MCX and NCDEX were formed in answer to these problems faced by the producers and farmers.

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COMPETITORS:
As such there are large numbers of firms providing the above stated services but among them some of firm ones are as follows: RELIGARE INDIA INFOLINE SIDDHI VINAYAK BONANNZA ANAND RATHI ANAGRAM SPAN COMMODITIES ANGEL BROKING KOTAK SECURITIES

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Chapter-3 Objectives and Research Methodology Objectives of the study:

To understand 1) 2) 3) 4) 5) What is commodity market? Indian scenario of commodity market. Global scenario of commodity market. Various trends in commodity market. Commodities market from personal client perspective.

RESEARCH METHODOLOGY:
For conducting study following analysis was done.

Research Design
Research Design is the overall plan to conduct research. It covers: data collection methods sampling decisions data analysis methods

Often constraints on resources limit research design so that it is less ideal. For e.g. smaller sample size. The purpose of research design is to decide approach that answers our problem in best way, given constraints on resources.

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Types of Research Design

There are three types of research designs: 1. Exploratory research design Used for discovering ideas and insights 2. Descriptive research design longitudinal and cross-sectional Used for describing characteristics of population 3. Causal research design Used for proving cause-effect relationship The research design used for this study is Descriptive Research.

Descriptive Research
Following designs (methods) are used for descriptive research: o Secondary data o Focus groups o Depth interviews o Surveys The tool used for research required in conducting the study is Depth interview.

Sample Design:
Cluster sampling is used for conducting research. Here cluster includes jewellers, retailers, individuals, speculators, traders etc.

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Instruments of data collection: Secondary Data

Secondary data is the data gathered by someone else prior to the current needs of the researcher. It is already available to the researcher before he starts conducting his research work. Advantages of secondary data Quickly available Economical Dependable Easy to Use Accessible Understandable

While conducting study the secondary data was collected as follows: Analyse the following data from Management Information Systems (MIS):a. Contact no. b. Address c. Data relating competitors. Other sources: Information through various web sites. Magazines and Journals. Newsletters and weeklies. Electronic Media.

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 Primary Data Collection:

1. Depth Interview
Principle of Depth Interview Respondent will reveal truth about sensitive issue after taking him in confidence. Respondents answer will be obtained by probing.

Characteristics of Depth Interview An unstructured interview of the respondent is taken Only one respondent is interviewed at a time Usually conducted by experienced researcher Interviewers role is extremely important since the emphasis is on probing

For conducting the study the respondents selected were jewellers, traders in metal, farmers and general public

The researcher originates the primary data. The primary data for the study was collected as follows: Feedback from a. Jewellers b. Metal traders c. Farmers d. Existing client. e. General public.

2. Telephonic call

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CHAPTER-4 DATA ANALYSIS AND INTERPRETATION: Turnover of Indian Commodity Exchanges (RS in Crores)

3000000 2500000 2000000 1500000 1000000 500000 0 2004 2005 2006 2007 M CX N CDEX N M CE OTHERS

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Percentage share of the turnover of Indian Commodity Exchange

NMCE, 0.71% NCDEX, 21.73%

Others, 3.34%

MCX, 74.22%

The study points out that futures trading in commodities results in transparent and fair price discovery on account of large-scale participation of entities associated with different value chains. This reflects upon the views and expectations of a wide section of investors related to that commodity. It provides an effective platform for price-risk management for all segments of players ranging from producers, traders, processors, exporters/importers and the end-users of a commodity. The delivery and settlement procedure differs for each commodity in terms of quality implications, place of delivery, options, penalties and margins, and are defined comprehensively by the exchanges. Members of an exchange can perform and clear transactions in only those contracts which are exchange specified and approved by the Forward Market Commission (FMC). On constraints, major challenges and policy options of commodities futures, the study points out that Commodity futures markets are the strength of an agricultural surplus country like India. Commodity exchanges play a pivotal role in ensuring stronger growth, transparency and efficiency of the commodity futures markets. This role is defined by their functions, infrastructure capabilities, trading procedures, settlement and risk management practices. However, Indian commodity exchanges are still at a nascent stage of development as there are numerous bottlenecks hampering their growth. The institutional and policy-level issues associated with commodity exchanges have to be addressed by the government in coordination with the FMC in order to take necessary

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measures to pave the way for a significant expansion and further development of the commodity futures markets. Some of the major problems associated with commodity

markets in India include infrastructure, trading system, broking community, controlled market, integration of regional and national exchanges as also integration of spot and futures markets. Infrastructure: The lack of efficient and sophisticated infrastructural facilities is the major growth inhibitor of the Indian commodity futures markets. Though some exchanges occupy large premises, they are deficient in terms of the necessary institutional infrastructure, including warehousing facilities, independent and automated clearing houses, transparent trading platforms, etc. Trading System: Though the operations of national exchanges are carried out through the electronic trading system, a majority of the regional exchanges continue to trade via the open outcry system. In order to attract a greater number of investors towards sector-specific commodities, regional exchanges must introduce the electronic trading system to assure the investors of transparency and fairly priced commodities. Broking Community: Though a large number of members exist in the exchanges records, most of them are not involved in trading due to the fact that the business is not highly profitable in comparison to equities. Therefore, it is important to absorb a large number of broking firms that have diversified into stock broking and other related businesses. To attract active traders to commodity futures, the regulatory authority needs to introduce a more stringent code of conduct in setting standards for brokers, imposing capital adequacy norms, defining qualification criteria, etc. Controlled Market: Price variability is an essential pre-condition for futures markets. Any deviation in the market mechanism or where the free play of supply and demand forces for commodities does not determine commodity prices will dilute the variability of prices and potential risk. For a vibrant futures market, it is imperative that commodity pricing must be left to market forces, without monopolistic government control. However, in India, scores of commodities in which futures trading is permitted are still protected under the ECA, 1955.

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Chapter-5 Findings, Conclusion, Recommendations & Limitations Findings:

Commodity Market has expanded a lot in last decade. It is now expected to grow at steedy speed of 30%.by 2010. MCX has the highest turnover in comparison to other commodity exchanges. The actual growth cannot be ascertained as a large amount of trading is done through dabba trading.

All the findings were communicated to Business Head for which necessary steps were taken.

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Conclusion
Commodities market will be the market of future as this market is under a bull way because all over the world commodity resources are scarce and demand is increasing so the commodity prices will go only in one direction that is up. So this is the right time to invest in the commodities market. Commodities market if compared to stock market will give better return in long run. Commodities are also less risky than stocks as the commodity prices can never become zero they will have some value at ant point of time. Commodities also provide better hedge against inflation as they have positive correlation, and inflation is increasing all over the world that is why it is advisable to invest in commodities. Commodities Exchanges in India is not efficient as compared to global exchanges they are very specialized for eg: LME trades only in metals NYMEX trades only in energy futures. The economic data in US and UK are updated very fast whereas in India we dont get updated data when it is required. People are not aware of this market in India and those who are aware has a myth that it is a highly risky to invest in commodities. So this a market untapped market having great potential.

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Recommendations to Company:
1) Unicon should launch a campaign for the awareness of investors . 2) Personal advisory department of Unicon should also help in creating awareness about commodities market and try to educate people about this market 3) Launch some brochure having all required information about commodity market . 4) Provide updated data and information to the clients. 5) Provide details of commodity requirement, supply, and demand.

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Limitations:1) Small size of sample- because of time consideration the sample size taken small, which effects on the accuracy/ reliability of the research. 2) Peoples perception- some of the people misunderstood the researcher as an insurance agent so they refuse to respond on the background of already getting insured. 3) Limited time span- some of the respondent gave the appointments beyond the research period therefore such people are excluded. 4) Lack interest in response- some of the people gave little time and shows lack interest for filling the questionnaire. 5) False data- people provide false data as they were scared about providing actual data such as net income , premium paid etc. 6) Appointments- getting appointments with people was difficult as most of the people were busy and it was difficult to contact them again and again

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BIBLIOGRAPHY www.lme.co.uk www.nymex.com www.mcxindia.com www.ncdex.com www.brusaderivative.com Hot commodities CRB yearbook www.Karvycomtrade.com www.Agriwatch.com 10) www.Lbma.com 11) www.Sicom.com.SG 12) www.Cme.com 13) www.Cbot.com 14) www.dce.com.cn 15) www.Tocom.or.jp 16) www.Crbtrader.com
1) 2) 3) 4) 5) 6) 7) 8) 9) 17) WWW.FAO.ORG 18) www.Daily Reckoning.co.uk

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