The document summarizes a study on commodity futures as an investment avenue. It outlines the following: 1) The objectives of the study were to examine risk factors of commodity futures trading, study the influence of futures trading on prices and variations, and evaluate commodity futures as investment avenues in India. 2) The methodology included a literature review, collection of primary and secondary data through questionnaires and other sources, and convenient sampling of 30 respondents. 3) The findings showed that 100% of respondents did not trade in commodity futures, but 80% were potential customers. It also analyzed factors influencing prices and traders' satisfaction with the commodity exchange.

1. A study on commodity
futures as an investment
avenue
- Sairam Bathulla 11-E06

2. • To examine the various risk factors in using commodity
future.
• To study the influence of futures trading, on price and
price variation
• To evaluate the effectiveness of the various measures of
commodity futures as investment avenues in India
Research Objectives

3. • Indian commodity exchange and progress
• Rules governing commodity derivatives
exchanges
• Use of commodity derivatives for-
 Hedging
 Speculation
 Arbitrage.
Literature Review

4. • Data collection
• Primary data – questionnaire
• Secondary data - books, internet, newspaper articles
• Convenient Sampling
• Sample size - 30
Research Methodology

5. Age of Respondents
13%
18 – 24 years
43%
25 – 30 years
31 & Above
44%
Analysis & Interpretation

6. Annual income level
23%
27%
1,00,000 – 2,00,000
2,00,000 – 3,00,000
3,00,000 – 5,00,000
20%
5,00,000 & above
30%
Analysis & Interpretation

7. Do you trade in commodity futures ?
0%
Yes
No
100%
Analysis & Interpretation

8. what is the frequency of trading?
20%
Regular Trader
Potential Customer
80%
Analysis & Interpretation

9. Reasons behind regular trading:
17%
25%
Trade on an organized exchange
Standardized contract terms
25%
follows of daily settlement
location of settlement
33%
Analysis & Interpretation

10. Is futures trading influence the price and price variation ?
18
16
14
12
10
8
6
4
2
0
Yes
No
Analysis & Interpretation

11. If influences then on which factors
6
5
4
3
2
1
0
Seasonal price variation Inter & intra seasonal Short term oscillation Average received by
price variation producer and paid by
consumer
Analysis & Interpretation

12. If dose not influence commodity futures then what influence among
following?
8
7
6
5
4
3
2
1
0
By hedging By speculation By arbitrage
Analysis & Interpretation

13. Satisfaction about future trading in commodity exchange –
9
8
8
7
6
5 5 5 5
5
4
3
2
2
1
0
Transparent Fair price Automated Unique To provide To bring
trading discovery trading system identification nationwide together the
number reach and entities that
consistent the market can
offering trust
Analysis & Interpretation

14. Satisfaction on current regulatory mechanism of commodity futures
in India -
a. Limit on net open position as on the close
of the trading hours.
b. Limit on price fluctuation to allow cooling
of market in the event of abrupt upswing or
20%
17%
downswing prices.
a c. Special margin deposit to be collected on
b
outstanding purchase or sales when price
fluctuate.
c
d. Minimummaximum prices-these are
d
20% prescribed to prevent futures prices from
30%
e falling below as rising above not warranted
prospective supply or demand.
13% e. Skipping trading in certain derivatives of
the contract, closing the market for a
special period and even closing out the
contract.
Analysis & Interpretation

15. • The risk can be eliminated by –
 Speculation
 Hedging
 Arbitrage
 Seasonal price fluctuation
• The beta calculation
• The weighting scheme
Conclusion

16. • A negotiable document
• An agency is to be set up
• A Clearing House
• Commodities trading must be settled in
determined form
• Widespread market awareness
• Healthy competition
• The market should be made broader
Suggestion & Recommendations

17. Thank You…..