astudyoncommodityfuturesasaninvestment-130329125828-phpapp01

7/28/2019 astudyoncommodityfuturesasaninvestment-130329125828-phpapp01

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Research Objectives

To examine the various risk factors in using commodityfuture.

To study the influence of futures trading, on price and

price variation

To evaluate the effectiveness of the various measures ofcommodity futures as investment avenues in India


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Literature Review

Indian commodity exchange and progress

Rules governing commodity derivatives

exchanges

Use of commodity derivatives for-

HedgingSpeculation

Arbitrage.


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Research Methodology

Data collection

Primary dataquestionnaire

Secondary data - books, internet, newspaper articles

Convenient Sampling Sample size - 30


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Analysis & Interpretation

13%

44%

43%

Age of Respondents

1824 years

2530 years

31 & Above


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23%

20%

30%

27%

1,00,0002,00,000

2,00,0003,00,000

3,00,0005,00,000

5,00,000 & above

Annual income level


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100%

0%

Yes

No

Do you trade in commodity futures ?


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80%

20%

Regular Trader

Potential Customer

what is the frequency of trading?


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25%

33%

25%

17%

Trade on an organized exchange

Standardized contract terms

follows of daily settlement

location of settlement

Reasons behind regular trading:


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0

2

4

6

8

10

12

14

16

18

Yes

No

Is futures trading influence the price and price variation ?


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If influences then on which factors

0

1

2

3

4

5

6

Seasonal price variation Inter & intra seasonal

price variation

Short term oscillation Average received by

producer and paid byconsumer


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If dose not influence commodity futures then what influence among

following?

0

1

2

3

4

5

6

7

8

By hedging By speculation By arbitrage


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Satisfaction about future trading in commodity exchange

5

8

5 5 5

2

0

1

2

3

4

5

6

7

8

9

Transparenttrading

Fair pricediscovery

Automatedtrading system

Uniqueidentification

number

To providenationwidereach and

consistentoffering

To bringtogether theentities that

the market cantrust


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Satisfaction on current regulatory mechanism of commodity futures

in India -

17%

30%

13%

20%

20%

a

b

c

d

e

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

downswing prices.

c. Special margin deposit to be collected on

outstanding purchase or sales when price

fluctuate.

d. Minimum\maximum prices-these are

prescribed to prevent futures prices from

falling below as rising above not warranted

prospective supply or demand.

e. Skipping trading in certain derivatives of

the contract, closing the market for aspecial period and even closing out the

contract.


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Conclusion

The risk can be eliminated by

Speculation

Hedging

Arbitrage

Seasonal price fluctuation

The beta calculation

The weighting scheme


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Suggestion & Recommendations

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


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Thank You..

Documents

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