This presentation details the overall scenario for the Gems & Jewellery Sector in India as well as Gujarat. It highlights the business & investment opportunities present in the sector and also the government initiatives and interventions.
This presentation details the overall scenario for the Gems & Jewellery Sector in India as well as Gujarat. It highlights the business & investment opportunities present in the sector and also the government initiatives and interventions.
Learn which measurements and signals actually matter to your social media reporting and what you can do with them, insights from a "data guy", useful tips and tricks as well as helpful real-life examples!
Vunani Private Client Portfolio manager and well known TV personality Lavan Gopaul introduces you to trading Single Stock Futures (SSFs) on well know JSE Large cap stocks.
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2. AGENDA
• Why Commodities?
• My Learning's
• Association With Aditya Birla Money
• Understanding and analysing the Bullions Markets (Gold)
• Conclusion
4. ADITYA BIRLA FINANCIAL SERVICES GROUP –
COMPANY SNAPSHOT
Mutual Funds
• Ranked Top 5 in the Mutual Funds Industry
• Over Rs.60,000 crores in Average Assets under Management
Insurance
• Ranked Top 5 in the Insurance Industry
Distribution
• Over 4 million customers and 15,000+ employees
• As a distributor, enjoys strong presence through a wide range of product
offerings, including wealth management
5. ADITYA BIRLA MONEY – COMPANY SNAPSHOT
• Equity, Derivatives & Commodities broking
• Depository services and distribution of third party financial products
• Incorporated in 1995, became part of ABFSG in March 2009
• Pan India presence
• Primarily a retail focused business with larger presence in Tier II &
Tier III cities
• ABML now caters to over 180,000 customers
6. WEALTH MANAGEMENT DEPARTMENT
Financial Planning
• Identifying your financial goal
• Investment plan
• Portfolio construction
• Portfolio maintenance
• Portfolio review
7. WHY COMMODITIES?
• Portfolio Diversification - Commodities don’t move exactly the same way & at
the same time as equities do, for example, if equity falls on one day, commodities
may not necessarily fall that day as factors affecting both these markets are
different. For example, buying Infosys & buying Copper – both are completely
unrelated.
• Commodities are less related with each other as fundamentals driving each
commodity is different. Unlike stocks, which are affected by global & domestic
overall sentiments.
• Global in Nature – hence there is less risk for manipulation
• Low Volatility over Equities
• Leverage Effect
8. WHY COMMODITIES – AN EXAMPLE
• For example, if you Buy 1 contract of Gold (a 1 kg contract);
• Say, current price of Gold for MCX October Contract = Rs.30,000/-10 grams
• Value of 1 Kg Contract = Rs.30 lacs
• Margin Required for Buying 1 Contract = 4% i.e. Rs.1,20,000/-
• Gold Prices move up to Rs.30,500/10 grams
• You make a profit = Rs. 30,500 – Rs. 30,000 = Rs.500 * 100 = Rs. 50,000/-
on an investment of Rs. 1,20,000/-; a return of 41.6% (This return can be in
a single day also).
9. COMMODITIES – A DIVERSIFICATION TOOL
• Commodities don’t move exactly as per
equities markets. Hence risk can be reduced
by investing part of your portfolio in
commodities.
• Factors effecting commodity markets may
not necessarily affect equity markets. Like
a strike in copper mine in Chile may lead to
copper price rise but may not at all affect
the Indian equity markets.
• Looking at the chart, we see that Gold
prices touched a high in October 08 when
Sensex marked its low during same period.
• If an investor had kept a percentage of his
portfolio in commodities also, instead of
entire investment in equities at that time,
his losses would have been reduced.
10. COMMODITIES - LOWERING RISK IN PORTFOLIO
• The above table shows Sensex and gold prices during 2008. After the Sensex hit a high in Jan
’08, it hit a low by the end of the year while gold rose.
• The above table clearly indicates that if an investors had invested 100% of his portfolio in
equities he would have incurred a loss of 63% on his total investment during 2008. While 20%
of portfolio diversified into gold would have reduced his losses by around 33%.
Asset Class 2004 Sep 2010 % Returns
Sensex 5900 19350 228
Gold 5800 19000 228
Yr. 2008 Yr. 2008
Sensex 21200(Jan) 7700(Oct) -63.68
Gold 10000(Jan) 14300(Oct) 43.00
100% investment in Sensex -63.68
80% in Sensex and 20% in Gold -42.34
11. FUTURE OF COMMODITIES
Commodities
Size of Physical
Market
Conservative Multiplier (
In 3 years)
Global Multiplier
(In 3 – 5 Years)
Gold & Silver Rs. 43000 cr 20 Times
Rs. 8,30,000 cr
50 Times
Rs. 21,50,000 cr
Edible Oils Rs. 30000 cr 10 Times
Rs. 3,00,000 cr
20 Times
Rs. 6,00,000 cr
Metals Rs.11000 cr 10 Times
Rs. 1,10,000 cr
20 Times
Rs. 2,20,000 cr
Total Rs. 84,000 cr Rs. 12,40,000cr Rs. 29,70,000cr
12. COMMODITIES- LESS RELATED WITH EACH OTHER
• Commodities are less related not only with other asset classes like
stock, real estate, etc but have a lower relation with each other as
well.
• For example a fire in crude refinery unit may lead to increase in crude
oil prices, but may not impact other commodities like gold, copper
etc.
• Similarly the arrival of festival season may be bullish for precious
metals but not for crude oil or copper or rubber.
• Hence each commodity has its own unique fundamental price drivers.
• This allows investors to take positions in various commodities
simultaneously as one factor/event will not affect all commodities
equally, leading to diversified lower risk trading in commodities.
13. SEASONAL PATTERN OF DIFFERENT COMMODITIES
IS DIFFERENT
• Gold Seasonal Chart is different from copper as factors affecting both
metals are different.
• Hence investors get an opportunity to invest any time during the year
in various commodities since the price trend of different commodities
differs from each other during a particular period.
• Like copper is normally bullish during 1st quarter of a year while
gold peaks during last quarter of a year.
14. COMMODITIES – A GLOBAL PROPOSITION
• Entire world trades in commodities. All
industry sectors, Governmental organizations,
Central Banks, Commodity funds to the
common man, are affected by commodity in
their daily lives.
• Due to their global nature, manipulation is
difficult in commodities unlike equities where
a set of investors can move a stock; like KP 10
Stocks during Ketan Parikh heydays.
• Commodity movements can be explained
unlike equity movements where it is difficult
to site a proper reason for a stock movement.
For example, if Satyam stock moves by 5% in
a day, exact reason would be difficult to find.
• But it is easier to give a proper logical reason
for most of the international commodities like
gold, copper, crude etc.
15. COMMODITIES – LOW ON VOLATILITY OVER
EQUITIES
• Historically commodities have been less volatile compared with equity markets.
• Hence commodities as a part of portfolio will give a balance affect to the overall risk
adjusted returns.
• Low volatility means lower margins, hence higher leverage in Commodities.
16. COMMODITIES – UNIQUE TRADING ADVANTAGES
• Commodities provide unique advantages of trading late night which is not
possible in other markets.
• An investor thus has the option to trade even from home and after his work
hours. Attend office during the day and trade during night.
• Updating oneself on commodities is easy as factors affecting prices are few
when compared to stocks.
• Few commodities to trade, hence tracking makes easy. Further, commodities
are clubbed in categories :
• Bullion – Gold / Silver;
• Base Metals – Copper / Zinc / Nickel / Aluminium / Lead / Tin;
• Energy – Crude Oil / Natural Gas.
This makes further analysis easy.
17. FUNDAMENTALS INFLUENCING COMMODITIES
• Demand & Supply
• Seasonal patterns
• Global & Indian economic data / policies
• Weather conditions
• Import / export parity and government policies
• Forex / currency movement
• Global political / economic events and data
• Global Hedge / Commodity Fund Activity
• US / Euro-Zone / China / Japan – Key Data Releases & Central Banks
Statements
18. GOLDEN RULES OF TRADING
• Always trade with Strict Stop-loss
• Don’t risk more than 5% of corpus on any one trade
• Trade with the TREND
• Do not trade on HOPE. Hope is good for in life but not in
markets
• Taking small profits and letting losses run is based on fear
and hope. This every trader will have to find a way to deal
with
• Do not increase your commitment with success.
Overconfidence can be very dangerous in markets
19. GENERAL CONCERNS OF INVESTORS
• Higher Leverage generally attracts the trader to take extremely high leverage
positions. Any adverse price movement will have a significant impact on
portfolio. While at the same time, any positive price movement will lead to a
windfall.
• For example, if copper prices fall by Rs.5 per kg, it will give a multiplier
effect of total loss of Rs.5000 per contract. So if any investor is holding 10
long position, he will incur a Rs.50,000 loss. This could lead to wiping of
margins if an investor holds his position without stop loss & market
continues to move against him.
• Hence investors feel jittery thinking that commodities lead to losses without
realizing the effect of leverage. The same is applicable while trading equities
as well.
• Disciplined trading by putting stop losses on positions is the way to trade
profitably.
20. COMPANY’S RESEARCH CAPABILITIES
• Daily Fundamental & Technical Reports covering major commodities
– analyzing global trends, major news events; key data releases and a
technical perspective as well.
• Provide intraday and positional trading calls with a strike rate of 65%
- 70% on major commodities such as gold / silver / copper / crude/
soybean / guarseed / chana, to name a few.
• Publish in-depth special monthly reports on Gold / Silver aimed at
educating the investors on global happenings, to help them take
advantage of price moves.
21. ASSOCIATION WITH ADITYA BIRLA MONEY
• Revenue Sharing…
• Trip To Abroad…
• Honors Party…
• No Cost Involved…
• 100% Assistance From Service Team…
• Best Research & Asset Management Team…
• Sound Past Track Record…
22. OBJECTIVES
• Understanding and analysing the Bullions Markets (Gold)
• Preparing the presentations for new and old clients
• Monitoring the progress of new recruits for bringing in more business
for the company
23. UNDERSTANDING AND ANALYSING THE BULLIONS
MARKETS (GOLD)
• Extensive study of the bullion markets with respect to gold
• Micro and Macro level perspectives
• Analysis of the movement of Indian Gold Prices vis-à-vis Major
Global Stock indices
24. FIVE KEY FACTORS AFFECT THE PRICE OF GOLD
• Value of US dollar
• Jewellery demand from Asian markets and Chinese
• Central banks
• Gold production
• Increased investment in gold
49. CONCLUSION
Year Return
on Gold
Inflation in
Indian
Economy
USD-INR
Exchange
Rate
Return
on
Silver
Return
Copper
Return
NYSE Index
Return on
BSE Index
2007 16.32% 6.39% -6.30% 16.95% 10.36% 11.76% 46.97%
2008 19.38% 8.32% 4.17% -7.92% -26.29% -17.91% -12.15%
2009 29.75% 10.83% 8.02% 24.22% 15.47% -16.49% -9.43%
2010 24.96% 12.11% -3.21% 62.28% 55.08% 17.05% 40.06%
2011 28.96% 8.87% 7.30% 35.52% 9.82% 1.93% -5.29%
50. CONCLUSION
• Gold is the only asset which has never given out negative returns over
past 5 year despite tough economic conditions. It has also been
successful in taming inflation and give out better returns when
compared to other options available in market.
• Even one on one comparison with other available options gives an
edge to the gold as a perfect investment avenue which almost assures
great returns with minimal risks associated.
