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The presentation on the effect of commodity futures


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The presentation on the effect of commodity futures

  1. 1. Submitted by Tejal Navarangani Parth Shah Submitted to Maulik VasaniThe Sunshine Group of Institution, Rajkot
  2. 2.  The behaviour of commodity prices, an issue that has received considerable attention from academics, is also a major concern for producers and consumers. Most commodity markets are distinguished by the fact that there is a spot or cash market in which the physical product is sold as well as a forward market in which contracts for future delivery of the product are sold. Our research is based on the problem that weather future treading effect on spot market or not.
  3. 3.  1. Commodity Spot Prices: An Exploratory Assessment of Market–Structureand Forward–Trading Effects1By Margaret E. Slade & Henry Thille, September 2004 in this as with most empirical studies of futures prices, we find a p ositive time–series relationship between trading volume and the volatility of spot prices. Moreover,since we deal with multiple related markets, we are able to assess that relationship in the cross section, and we find that it is also positive. Our findings are consistent with the predictions of many destabilizing–speculation and informational models. We can, however, go further. Indeed, we are able to exploit our instrumental–variables technique to distinguish between broad classes of theories that predict a positive relationship.
  4. 4. 2. Commodity Derivative Market and its Impact on Spot MarketBy Golaka C Nath and Thulasamma Lingareddy It is expected that futures trading helps in reducing seasonal/cyclical fluctuation in price. We wanted to find out if this has happened in case of the above commodities. the study finds that the introduction of future trading in the selected commodities had apparently led to increase in price of commodity like urad but the same is not true for wheat and gram. The spot prices of all three commodities under study have increased in the post futures period though except for urad, variables are not found statistically significant. The spot prices of these commodities declined after the ban on futures trading was introduced. However, the price volatility increased significantly during the period when futures were allowed. There has been a sharp fall in volatility after the ban of futures in these commodities. Althou gh gram prices too have posted a moderate rise in the post-futures trading period, the impact was not found statistically significant.
  5. 5.  whether the index futures trading in India has caused a significant change in spot market volatility of the selected underlying individual commodity. how the index futures trading has affected trading efficiency of the selected commodity. Find out the perception of investors. Find out the investing pattern of investor in commodity market. How commodites are treaded in commodity market.
  6. 6.  Ho : commodity prices effects on spot prices. H1: commodity prices does not effect on spot prices.
  7. 7. 1. Research design THIS RESEARCH FALL INTO CATEGORY OF Exploratory research2. Data Collection Design ◦ PRIMARY DATA The data regarding commodity prices and spot prices will be procured from respective news papers and exchange websites etc. ◦ SECONDARY DATA Through Questionnaire investors’ preference can be known.
  8. 8. 3.Sampling Design ◦ Sampling design would be conveniences. ◦ Sample size would be of 7 commodities. ◦ Population will be of all commodities.
  9. 9.  Prepare proposal by 15th December 2010 Complete fieldwork by 28th February 2011 Data collection by 5th March Complete analysis by 15th March 2011 Complete final report by 25th March 2011
  10. 10.  First investors’ awareness towards this concept can be known. Some of the investors who are not aware about this, they can be guided on this area. Again traders and broking firms can be aware about relevance between future market and spot market. Beneficiaries Customers Broking firms Investors Traders Other prospective customers