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Anuj & rohit012

  1. 1. A Research Report“Investor Perception Towards commodity market for investing’’ Report submitted in partial fulfillment of the requirement of MASTERS OF BUSINESS ADMINISTRATION (Affiliated to Uttar Pradesh Technical University) Academic Session (2011 – 2013)Under Supervision of: Submitted By:Prof. Anjali Mishra Anuj kumar garg – 1129070009 Rohit singh sengar-, 1129070011 MBA 1st year ABES IT Group of Institutions1|Page
  2. 2. ACKNOWLEDGEMENTWe wish to acknowledge our profound gratitude to all those who assisted us inthe completion of this report.With great pleasure, we extend our deep sense of gratitude towards AnjaliMishra (asst. professor ABES IT college ,Ghaziabad), under whosevaluable guidance, constant interest and encouragement, who has devoted herever-precious time from her busy schedule and helped us in completing theProject.This co-operation is not only useful for this project but will be a constantsource of inspiration for us in future life.We are also thankful to those who helped us intellectually in preparation ofthis project directly or indirectly.ANUJ KUMAR GRAGROHIT SINGH SENGAR2|Page
  3. 3. TABLE OF CONTENTS Acknowledgment Introduction 4-12 Objective of Project 13 Limitation 14 Literature review 15 Research methodology 16 Data Analysis and interpretation 17-33 Conclusion 34-35 Suggestions and Recommendations 36 Annexure Bibliography3|Page
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  5. 5. INTRODUCTION TO COMMODITY FUTURES THE HISTORYThe modern commodity markets have their roots in the trading ofagricultural products. While wheat and corn, cattle and pigs, werewidely traded using standard instruments in the 19th century in theUnited States, other basic foodstuffs such as soybeans were onlyadded quite recently in most markets. For a commodity market to beestablished, there must be very broad consensus on the variations inthe product that make it acceptable for one purpose or another.The economic impact of the development of commodity markets ishard to overestimate. Through the 19th century "the exchangesbecame effective spokesmen for, and innovators of, improvements intransportation, warehousing, and financing, which paved the way toexpanded interstate and international trade." Exchange Name Commodities TradedChicago Board of Trade Corn, ethanol, gold, oats, rice, silver, soybeans, wheat(CBOT)Chicago Mercantile Butter, milk, feeder cattle, frozen pork bellies, lean hogs, liveExchange (CME) cattle, lumberIntercontinental Exchange* Crude oil, electricity, natural gas(ICE)Kansas City Board of Trade Wheat, natural gas(KCBT)Minneapolis Grain Corn, soybeans, wheatExchange (MGE)New York Board of Trade Cocoa, coffee, cotton, ethanol, frozen concentrated orange(NYBOT) juice, sugarNew York Mercantile Aluminum, copper, crude oil, electricity, gasoline, gold, heatingExchange (NYMEX) oil, natural gas, palladium, platinum, propane, silver5|Page
  6. 6. Regulatory framework in India In India, the statutory, basis for regulating commodity futures‟ tradingis found in the Forward Contracts (Regulation) Act, 1952, which (apart frombeing an enabling enactment, laying down certain fundamental ground rules)created the permanent regulatory body known as the Forwards MarketsCommission. This commission holds overall charge of the regulation of allforward contracts and carries out its functions through recognized association.GUIDELINES BY THE RBI PERTAINING TO COMMODITYFUTURE TRADINGThe guidelines are: - These guidelines cover the Indian entities that are exposed tocommodity price risk.  Name and address of the organizationI. A brief description of the hedging strategy proposed:  Description of business activity and nature of risk.  Instruments proposed to be used for hedging.  Exchanges and brokers through whom the risk is proposed to be hedged and credit lines proposed to be available. The name and address of the regulatory authority in the country concerned may also be given.  Size/average tenure of exposure/total turnover in a year expected. II. Copy of the risk management policy approved by the Board ofDirectors covering:  Risk identification  Risk measurements  Guidelines and procedures to be followed with respect to revaluation/monitoring of positions.  Names and designations of the officials authorized to undertake transactions and limits. III. Any other relevant information  The authorized dealers will forward the application to Reserve Bank along with copy of the Memorandum on the risk management policy6|Page
  7. 7. placed before the Board of Directors with specific reference to hedging of commodity price exposure. .  i. All standard exchanges traded futures will be permitted. ii. Tenure of exposure shall be limited to 6 months. Tenure beyond 6 months would require Reserve Bank‟s specific approval. iii. Corporate who wish to hedge commodity price exposure shall have to ensure that there are no restrictions on import/export of the commodity hedged under the Exim policy in force.  After grant of approval by Reserve Bank, the corporate concerned should negotiate with off-shore exchange broker subject, inter alia, to the following:-  Brokers must be clearing members of the exchanges, with good financial track record.  Trading will only be in standard exchange- traded futures contract/options. SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI) SEBI was setup in April 12, 1988. To start with, SEBI was set up as anon-statutory body. .SEBI guidelines for COMMODITY FUTURES TRADING There are many regulatory authorities, who are monitoring commodityfutures trading, one of them is SEBI. The following Report is one of theregulatory frameworks for the commodity futures trading. Report of the committee appointed by the SEBI onparticipation by Securities Brokers inCommodity FuturesMarkets under the chairmanship of Shri K.R. Ramamurthy(February 5, 2003)The following were the recommendations:- I) Participation of Securities Brokers in Commodity Futures Market o The committee was of the unanimous view that participation of intermediaries like securities brokers in the commodity futures market is welcome as it could inter-alia increase the number of quality players,7|Page
  8. 8. infuse healthy competition, boost trading volumes in commodities and in turn provide impetus to the overall growth of the commodity market. o Since the commodity market falls under the regulatory purview of a separate regulatory authority viz., Forward Market Commission, to ensure effective regulatory oversight by the Forward Market Commission, and to avoid any possible regulatory overlap, the pre- condition for such entry by intending participating securities brokers in the commodity futures market would be through a separate legal entity, either subsidiary or otherwise. Such entity should conform from time to time to the regulatory prescription of Forward Market Commission, with reference to capital adequacy, net worth, membership fee, margins, etc. o The committee took note of the fact that the existing provisions of the Securities Contracts (Regulation) Rules, 1957 forbid a person to be elected as a member of a recognized stock exchange if he is engaged as principal or employee in any business other than that of securities, except as a broker or agent not involving any personal financial liability. The Committee recommended that the above provisions in the Securities Contract (Regulations) Rules be removed/amended suitably to facilitate securities brokers participation/engagement in commodity futures. o An important felt need was the necessity to improve market awareness of trading and contracts in commodities. The committee therefore recommended the forward market commission take appropriate initiatives in training the market participants. II) Risk containment measures In the background of the Forward Market Commission‟s report on risk containment measures currently obtaining in commodity markets and the committee‟s recommendation to permit security brokers‟ participation in commodities markets only through a separate legal entity, the committee considers that ensuring strict compliance of the regulatory prescriptions like net worth, capital adequacy, margins, exposure norms, etc., by the respective market regulators, and due oversight would be an adequate safeguard to ensure that the risks are not transmitted from one market to the other.III) Utilization of existing infrastructure of stock exchanges On the issue of convergence/integration of the securities market and commodities market, that is, of allowing stock exchanges to trade in commodity derivatives and vice versa, the committee was of the view that in the current statutory and regulatory framework and8|Page
  9. 9. existence of two separate and established regulators, the issue of integration of the two markets would require detailed examination, particularly for the purpose of defining clearly the scope of regulatory purview and responsibility.What is a commodity? Commodity includes all kinds of goods. FCRA defines “goods” as“every kind of moveable property other than actionable claims, money andsecurities”. Futures trading are organized in such goods or commodities as arepermitted by the central government. The national commodity exchanges havebeen recognized by the central government for organizing trading in allpermissible commodities which include precious (gold & silver) and non-ferrous metals; cereals and pulses; oil seeds, raw jute and jute goods; sugar;potatoes and onions; coffee and tea; rubber and spices, etc.Commodity Futures Trading The commodity futures trading, consists of a futures contract, which isa legally binding agreement providing for the delivery of the underlying assetor financial entities at specific date in the future.Like all future contracts, commodity futures are agreements to buy or sellsomething at a later date and at a price that has been fixed earlier by the buyerand seller.So, for example, a cotton farmer may agree to sell his output to a textilescompany many months before the crop is ready for actual harvesting.The complicating factor is quality. Commodity futures contracts have tospecify the quality of goods being traded. The commodity exchangesguarantee that the buyers and sellers will stick to the terms of the agreement.When one buys or sells a futures contract, he is actually entering into acontractual obligation which can be met in one of two ways.First, is by making or taking delivery of the commodity. This is the exception,not the rule however, as less than 2% of all the futures contracts are met byactual delivery. The other way to meet one‟s obligation, the method whicheveryone most likely will use, is by “offset”.Very simply, offset is making the opposite or offsetting sale or purchase of thesame number of contracts sold, sometimes prior to the expiration of the date ofthe contract. This can be easily done because futures contracts arestandardized.What makes commodity trading attractive? A good low-risk portfolio diversifier Less volatile, compared with, say, equities Investors can leverage their investments and multiply potential earnings Better risk- adjusted returns A good hedge against any downturn in equities or bonds as there is little correlation with equity and bond markets9|Page
  10. 10. High correlation with changes in inflation No securities transaction tax leviedFunctions of futures markets The futures market serves the needs of individuals and groupswho may be active traders or passive traders, risk averse or profitmakers. The above broadly classifies the functions of the futuresmarkets: -1) Price Discovery2) Speculation3) Hedging1) Price discovery “Futures prices might be treated as a consensus forecast by the market regarding trading future price for certain commodities”. This classifies that futures market help market watchers to “discover” prices for the future. E.g.- A furniture manufacturer, making plywood furniture for printing his catalogue for next year‟s needs to estimate price in advance. This task is different as the cost of plywood varies greatly, depending largely on the health of the construction industry. But the problem can be solved by using prices from the plywood futures market.2) Speculation Speculation is a spill over of futures trading that can provide comparatively less risk adverse investors with the ability to enhance their percentage returns.Speculators are categorized by the length of time they plan to hold a position.3) Hedging While engaging in a futures contract in order to reduce risk in the spot position, hedging is undertaken. Therefore the future trader is said to establish a hedge.10 | P a g e
  11. 11. Participants  Hedgers In a commodity market, hedging is done by a miller, processor, stockiest of goods, or the cultivator of the commodity. Sometimes exporters, who have agreed to sell at a particular price, need to be a hedger in a futures and options market. All these persons are exposed to unfavorable price movements and they would like to hedge their cash positions.  Speculators Speculator does not have any position on which they enter in futures options market. They only have a particular view about the future price of a particular commodity. They consider various fundamental factors like demand and supply, market positions, open interests, economic fundamentals internal events, rainfall, crop predictions, government policies etc. and also considering the technical analysis, they are either bullish about the future process or have a bearish outlook. In the first scenario, they buy futures and wait for rise in price and sell or unwind their position the moment they earn expected profit. If their view changes after taking a long position after taking into consideration the latest developments, they unwind the transaction by selling futures and limiting the losses. Speculators are very essential in all markets. They provide market to the much desired volume and liquidity; these in turn reduce the cost of transactions. They provide hedgers an opportunity to manage their risk by assuming their risk.  Arbitrageur He is basically risk averse. He enters in to those contracts where he can earn risk less profits. When markets are imperfect, buying in one market and simultaneous selling in another market gives risk less profit. It may be possible between two physical markets, same for 2 different periods or 2 different contracts.11 | P a g e
  12. 12. Intermediate Participants  Brokers A broker is a member of any one of the futures exchange, one gets commodity or financial futuresexchange, one gets the right to transact with other members of the same exchange. All persons hedgingtheir transaction exposures or speculation on price movement cannot be members of a futures exchange.Non- member has to deal in futures exchange, through a member only. This provides the member the role ofa “broker”.Margin Margin is money deposited in the brokerage account, whichserves to guarantee the performance of theclients‟ side of the contract.This is generally in the neighborhood of 2-10% When the client enters a position, he would have deposited, themargin in his account, but the brokeragehouse is required to post themargin with a central exchange arm called the „clearing house‟. Theclearinghouse is a non-profit entity, which in effect is in charge ofdebiting this money to the accounts of winnersdaily.12 | P a g e
  13. 13. Objective of the Study1. To study the perception of investors of commodity market.2. To understand commodity market.13 | P a g e
  14. 14. Limitations and Constrains  Lack of resources  Cost Constraint.  Respondents are limited to hapur city.14 | P a g e
  15. 15. LITERATURE REVIEWCOMMODITY MARKETS: AN ISLAMIC ANALYSISResearch on derivatives trading is still in its early stages. The generalresponse of Muslim jurists is negative. The first institution to address theissue was the Makkah based Fiqh Academy. It acknowledged some of thebenefits of derivativesbut stressed that these benefits are accompanied bytransactions forbidden in the shari[ah such as gambling, exploitation,monopoly, price distortion and the selling of what one does not own.Moreover, transactions are settled merely on the basis of price differentialsas what happens between gamblers. However, the spot transactions arevalid from theshari[ah point of view but when the seller does not own theobject he sells, the sale in this case must fulfil the conditions of salam andthe buyer is not permitted to sell again prior to taking possession of theunderlying assets. KARVR COMTRADE LTD.KarvyComtrade Ltd. has established its dedicated research desk at Hyderabadkeeping in view of varied requirements of clients in terms of taking informeddecision. Initially started with a team of just 2 analysts in early 2005, now theteam has 8 analysts tracking different commodity markets.The Karvy Commodities Research team comprises of Technical Analysts,Fundamental Analysts and Derivatives Analyst who analyze news, events anddata in order to arrive at a price outlook both on short term and long term basisfor all the commodities. The coverage on different segments of commoditieshas been increasing over the time and currently generates reports on most ofthe active commodities which belong to different complexes like preciousmetals, Base metals, Energy, Oil & Oilseed complex, Pulses, Spices, Softs andCereals etc.15 | P a g e
  16. 16. RESEARCH METHODOLOGYResearch Type-DescriptiveSample DesignIn this study convenient random sampling method is used to select therespondents. The sample size is 30 respondents.Source of DataThe various sources of data are 1. Primary Sources, which includes questionnaire. 2. Secondary data which includes books , internet etc.Tools for Data CollectionThe questionnaire is the tool used for data collection.Analyses and InterpretationThe various tools for analysis used are graphs, charts, percentagegrowth.16 | P a g e
  17. 17. 17 | P a g e
  18. 18. QUESTIONERE ANALYSESIn this section the data obtained through the questionnaire from theinvestors in commodity futures isanalyzedSECTION A:Sex profile Sex No of Respondents Percentage Male 23 80% Female 6 20% Column Chart Showing Sex Profile Of The Respondents 100% 80% Percentage 60% 40% 20% 0% Male Female Sex Male FemaleFindingsFrom the above table and chart, it can be seen that 80% of therespondents were male, and 20% werefemale.InterpretationIt can be concluded that mainly males invest in commodity futures.18 | P a g e
  19. 19. Age Profile Age Group No. of Percentage Respondents 20-30 years 13 43% 30-40 years 9 30% 40-50 years 5 17% 50 years and above 3 10% Pie Chart Showing Age Profile Of The Respondents 10% 20-30 Years 17% 43% 30-40 Years 40-50 Years 50 Year and above 30%Findings From the above table and chart, it can be seen that 43% of therespondents were in the age group of 20-30 years, 30% were in the agegroup of 30-40 years, and 17% were in the age group of 40-50 years and10% inthe age group of 50 years and above.Interpretation It can be concluded that mainly the young people have investedcommodity futures.19 | P a g e
  20. 20. Education profile: Educational No. of Percentage Qualification Respondents Higher Secondary 3 10% Graduate 15 50% Post Graduate 12 40% Pie Chart Showing Educational Profile Of The Respondents 10% 40% Higher Secondary Graduate Post Graduate 50%Findings From the above table and chart, it can be seen that 50% of therespondents were graduates, 40% were post graduates and only 10percent were studied up to higher secondary.Interpretation It can be concluded that mainly the young graduates haveinvested commodity futures. But in real market this doesn‟t stand true.20 | P a g e
  21. 21. Occupation Profile Occupation No. of Respondents PercentageGovernment Employee 1 3% Private Sector 9 30% Employee Self-Employee 5 17% Businessmen 10 33% Commodity Futures 5 17% Advisor Others 0 0% Pie Chart Showing Occupational Profile Of The Respondents 0% 3% Government Employee 17% Private Sector 30% Self-Employee Businessmen Commodity Futures 33% Others 17%Findings From the above table and chart, it can be seen that 3% of therespondents were government employees, 30% were private sectoremployee, 17% were Self-Employed and 33% were businessmen, 17%wereCommodity futures advisors.Interpretation It can be concluded that mainly businessmen and privatesector employees invest in commodities.21 | P a g e
  22. 22. Income Profile Income Group No. of Percentage Respondents Below Rs. 4 Lakh 11 37% Rs. 4 – 10 Lakh 18 60% Rs. 10 – 25 Lakh 1 3% Above Rs. 25 Lakh 0 0% No. of Respondents 0% 3% 37% Below Rs. 4 Lakh Rs. 4 – 10 Lakh Rs. 10 – 25 Lakh Above Rs. 25 Lakh 60%Findings From the above table and chart, it can be seen that 37% of therespondents were in the income group of below Rs. 4 lakh, 60% were inthe income group of Rs. 4-10 lakh, and 3% were in the income group ofRs. 10-25 lakh.Interpretation It can be concluded that most of the people who have investedcommodity futures are in the income groupof Rs.4-10 lakh.22 | P a g e
  23. 23. SECTION B1) Have you invested in commodity futures? Particulars No. Of Percentage Respondents Yes 20 67% No 10 33% Column Chart Showing The Percentage of Respondents who have Invested In Comodity Future 80% 70% 60% Percentage 50% 40% 30% 20% 10% 0% Yes No Particular Yes NoFindings From the above table and chart, it can be seen that 67% of therespondents have invested in commodity futures, and 33% have notinvested in commodity futuresInterpretation It can be concluded that most of the respondents have invested incommodity futures.23 | P a g e
  24. 24. 2) What is your Experience in your previous Investment ? Particulars No. Of Percentage Respondents Good 15 50% Bad 9 30% Reasonable 6 20% Column Chart Showing The Experience of Respondents in Their Previous Investment 60% 50% 40% Percentage 30% 20% 10% 0% Good Bad Reasonable Particular Good Bad ReasonableFindingsIt can be seen that 50% of the respondents had a good experience intheir previous investment, 30% had a reasonable experience in theirprevious investment and 20% had a bad experience in their previousinvestment.Interpretation It can be concluded that most of the respondents had a goodexperience in their previous investment.24 | P a g e
  25. 25. 3) What is your objective for trading in commodity futures? Particulars No. Of Percentage Respondents Less Risky 10 33% Investment Diversification of 12 40% Portfolio Very Good Returns 6 20% Others 2 7% Column chart showing the objective of the investor to invest in commodity futures 45% 40% 35% 30% Percentage 25% 20% 15% 10% 5% 0% Less Risky Diversification of Very Good Others Investment Portfolio Returns Particular Less Risky Investment Diversification of Portfolio Very Good Returns OthersFindings It can be seen that out of the investors in commodity futures, 33%of them have invested with the objective a less risky investment, 40% ofthem invested with the objective of diversifying hid portfolio and 20%of them due to the expectation of very good returns and 7% haveinvested due to other reasons.Interpretation It can be concluded that most of the investors in commodityfutures, have invested with the objective ofdiversifying their portfolioand to reduce risk .25 | P a g e
  26. 26. 4) What type of trade do you prefer the most? Particulars No. Of Percentage Respondents Short Term Positions 15 50% Medium term 9 30% Long term positions 6 20% Column chart showing the type of positions the investors preference 60% 50% 40% Percentage 30% 20% 10% 0% Short Term Positions Medium term loan Long term positions Particular Short Term Positions Medium term loan Long term positionsFindings It can be seen that out of the investors in commodity futures, 50%of them prefer short-term positions, 30%of them preferred medium termpositions and 20% preferred long-term positions.Interpretation It can be concluded that most of the investors trading incommodity futures prefer short-term positions.26 | P a g e
  27. 27. 5) Which commodities have you traded in, the most? Commodity No. Of Percentage Respondents Wheat 9 30% Cotton 5 17% Gold 6 20% Soybean 4 13% Silver 3 10% Copper 3 10% No. Of Respondents 10% Wheat 10% 30% Cotton Gold 13% Soybean Silver 17% 20% CopperFindings It can be seen that out of the investors in commodity futures, 30%of them have traded mostly in wheat, 17% of them traded in cotton, 20%in Gold, 13% in soybean and 10% each in copper and silver, .Interpretation It can be concluded that the mostly traded commodity is wheat,followed by gold and cotton. Copper is the least traded commodity.27 | P a g e
  28. 28. 6) What percentage of savings have you invested in commodityfutures? Particulars No. Of Respondents Percentage 0-10% 3 10% 10-20% 9 30% 20-30% 12 40% 30-50% 3 10% 50% and above 3 10% Pie chart showing the percentage of savings the investors has made in commodity futures 10% 10% 10% 0-10% 10-20% 30% 20-30% 30-50% 50% and above 40%Findings It can be seen that, 40% of the investors have invested between20-30% of their savings in commodity futures, 30% of them haveinvested between 10-20% of their savings and total 20% of them haveinvested above 30% of their saving in commodity futures.Interpretation It can be concluded that most of the investors have investedbetween 20-30% of their savings in commodity futures.28 | P a g e
  29. 29. 7) What do you think of the return derived from commodityfutures? Particulars No. Of Percentage Respondents Good 18 60% Reasonable 8 27% Bad 4 13% Column chart showing the extent of returns derived by the investors from commodity futures 70% 60% 50% 40% 30% 20% 10% 0% Good Reasonable Bad Good Reasonable BadFindings It can be seen that, 60% of the investors feel that they got goodreturns from commodity futures trading, 27% of them feel that they gotreasonable returns commodity futures, 13% of the investors felt they gotbad returns from commodity futures.Interpretations It can be concluded that most of the investors got good returnsfrom commodity futures.29 | P a g e
  30. 30. 8) Do you think commodity future is a good investmentopportunity? Particulars No. Of Percentage Respondents Yes 21 70% No 9 30% Column chart showing opinion of the investor of whether commodity futures is a good investmentopportunity 80% 70% 60% 50% 40% 30% 20% 10% 0% Yes No Yes NoFindingsFrom the above table and chart, it can be seen that 70% of the investorsfeel that commodity futures is a good investment opportunity, and 30%investors feel that commodity futures is not a good investmentopportunityInterpretation It can be concluded that most of the investors feel thatcommodity futures is a “good investmentopportunity”30 | P a g e
  31. 31. 9) Which type of trader you are? Particulars No. Of Percentage Respondents Hedgers 13 43% Speculator 6 20% Arbitrager 11 37%Findings From the above table and chart, it can be seen that most of respondentsare hedger and arbitragerInterpretation It can be concluded that most of the respondents are hedgers31 | P a g e
  32. 32. 10) In which commodities you would like to invest in futureand why? Particulars No. Of Percentage Respondents Wheat 15 50% Cotton 9 30% Gold 6 20%Findings From the above table and chart, it can be seen that 50% of therespondents want to invest in wheat and 30% want to invest in cottoncommodity futuresInterpretation It can be concluded that most of the respondents want to invest inwheat commodity futures.32 | P a g e
  33. 33. 11)factors you take into consider while invest in commodities? Particulars No. Of Percentage Respondents Global economy 10 33% Availability 14 47% others 06 20%Findings From the above table and chart, it can be seen that 33% of therespondents consider global economy as a factor before investing commodityfuture 20% consider inOther factors in commodity futures.Interpretation It can be concluded that most of the respondents consider availabilityof commodities in commodity futures33 | P a g e
  34. 34. FINDINGSFrom the analysis made the following findings can be derived:There is awareness of commodity market in the eyes of investors.Investors consider factor like global economy.Person between age of 20-40 years are more active player in the commoditytrading and 10-30 % of their income are invested in market. Most of thembelieve that return derived from commodity are good and reasonable.There has been seen that most of private sector employees and business personinvests in commodity marketIt has been that, respondents are investing their income in diversified portfolioand less risky assets and 50% of respondent takes short position in the market.There has been seen that gold, wheat and cotton are more dealing commodityand investor believe that commodity market have good opportunist market infuture and most of investor invest when there is favorable price in market.34 | P a g e
  35. 35. CONCLUSIONNow a days investor become more careful in investment with considering thefactor like global economy, availability of commodity etc.. In the trading system people consider above factor for investment so we canconclude that investor are more moving towards the exchange traded marketIt can be concluded that one can use commodity futures for the hedgingpurposes rather than for the speculativeThus, commodity futures are a growing market.from all the above conclusions of it can be concluded,“commodityfutures can beused as a risk reduction and a sound investmentinstrument”35 | P a g e
  36. 36. RECOMENDATATIONSSince commodity futures are a new concept, more awareness must be createdby marketing this investment instrument appropriately.As commodity market are growing so one should trade in exchange tradedmarket rather than the OTC market.As commodity market growing so all groups of people must be asked toinvest in commodity should take better position with the help of fundamental and technicalanalysisIt is not a necessity that one must be very educated to invest in commodityfutures. So, it is recommended that those who are not so well educated alsocan invest in commodity futures.It is recommended that now a days investor should invest in agriculturecommodity because within the few days few of agriculture commodity arecoming up with huge quantity.36 | P a g e
  37. 37. 37 | P a g e
  38. 38. QUESTIONNAIREPART – A1) Name:2) Sex: Male Female3) Age: 20-30 Years 30-40 years 40-50 years Above 50 years4) Education: Higher secondary Graduation Post-graduation5) Occupation: Government employee Self-employee Commodity futures analyst Private sector employee Businessman Others ____________6) Income: Below 4 lakh 4,00,001 – 10,00,000 10,00,001 – 25,00,000 Above 25,00,00038 | P a g e
  39. 39. PART – B1) Have you invested in commodity futures? Yes No2) What is your experience in your previous investment (excluding commodityfutures)? Good Reasonable Bad3) What is your objective when trading in commodity futures? Less risky investment Diversification of portfolio Very good returns Others ______________4) What type of trade do you prefer the most? Short Term Position Medium Term Position Long Term Position5) Which commodities have you traded in the most? a. _________________ b. _________________ c. __________________6) What percentage of savings have you invested in commodity futures? 0-10% 10-20% 20-30% 30-50% 50% and above39 | P a g e
  40. 40. 7) What do you think of the return derived from commodity futures? Good Reasonable Bad8) Do you think commodity future is a good investment opportunity? Yes No9) which type of trader you are? Hedger speculator arbitrager10) In which commodities you would like to invest in future and why? __________________________________________11 Factors you take into consider while invest in commodities? __________________________________________40 | P a g e
  41. 41. BIBLIOGRAPHYWebsiteswww.rbi.orgwww.sebi.comwww.mcx.comwww.investopedia.com41 | P a g e