CONTENTS

Chapter No. Title Page No.

1 Introduction 7

2 Company profile 22

3 Objective & Methodology 27

4 Data analysis & interpretation 30

5 Finding 52

6 Conclusion 54

7 Bibliography 56
 Introduction

“A physical substance, such as food, grains, and metals, which is interchangeable with another
product of the same type, and which investors buy or sell, usually through futures contracts.”.
The price of the commodity is subject to supply and demand. Risk is actually the reason
exchange trading of the basic agricultural products began.

For example- A farmer risks the cost of producing a product ready for market at sometime in the
future because he doesn't know what the selling price will be.
More generally, a product which trades on a commodity exchange; this would also include
foreign currencies and financial instruments and indexes.
A commodity exchange is a place where various commodities and derivatives are bought and
sold. Commodities exchanges usually trade on commodity futures. Now here we are giving a set
of questions to understand the basic concepts of the commodity markets. This will be useful for
the people who are doing trading for the first time in commodity market. The exchanges are
regulated by the Forward Markets Commission. Unlike the equity markets, brokers don't need to
register themselves with the regulator. The FMC deals with exchange administration and will
seek to inspect the books of brokers only if foul practices are suspected or if the exchanges
themselves fail to take action. In a sense, therefore, the commodity exchanges are more self-
regulating than stock exchanges.

1) Where do I need to go to trade in commodity futures?

You have three options - the “National Commodity and Derivative Exchange”, the “Multi
Commodity Exchange of India Ltd” and The “National Multi Commodity Exchange of
India Ltd”. All three have electronic trading and settlement systems and a national presence.

2) What is the minimum investment needed?

You can have an amount as low as Rs 500. All you need is money for margins payable upfront to
exchanges through brokers. The margins range from 10 per cent of the value of the commodity
contract

For trading in bullion, that is, gold and silver, the percentage remain same but the total amount
changes according to the change in market price

The prices and trading lots in agricultural commodities vary from exchange to exchange (in kg,
quintals or tones), but again the minimum funds required to begin will be approximately Rs 500.

3)Do I have to give delivery or settle in cash?

You can do both. All the exchanges have both systems - cash and delivery mechanisms. The
choice is yours. If you want your contract to be cash settled, you have to indicate at the time of
placing the order that you don't intend to deliver the item.

If you plan to take or make delivery, you need to have the required warehouse receipts. More
over if you want to take delivery you have to tell at least before 5 or 6 days before the expiry
date so that the proper money can be sent and the required adjustment can be made at the
warehouse. For taking the delivery the “TIN NO” and “GIR NO” is required. Moreover in
delivery the commission increases and sales tax is also applicable.

4) What do I need to start trading in commodity futures?

As of now you will need only one bank account. You will need a separate commodity demat
account from the Multi-commodity exchange to trade on the MCX just like in stocks.

5) What are the other requirements at broker level?

You will have to enter into a normal account agreements with the broker. These include the
procedure of the Know Your Client format that exist in equity trading and terms of conditions of
the exchanges and broker. Besides you will need to give you details such as PAN no., bank
account no, etc.
6) What are the brokerage and transaction charges?

The brokerage charges is 0.5 Ps per100 Rs for intraday trading and if you want to take the
delivery then you have to pay 0.50 Ps per 100 Rs..The transaction charges are 0.1% and it is
same for all commodities.

7) Where do I look for information on commodities?

Daily financial newspapers carry spot prices and relevant news and articles on most
commodities. Besides, there are specialized magazines on agricultural commodities and metals
available for subscription. Brokers also provide research and analysis support.

But the information easiest to access is from websites. Though many websites are subscription-
based, a few also offer information for free. You can surf the web and narrow down you search.
 Company profile

1.1Company Profile-

Angel broking trust with customer relation since 1987.Today Angel has emerged as one of the
most respected stock broking and wealth management company in India. With its unique retail
focused stock trading business model angel is succeeded in providing real valve money to its
clients. The Angel group is the member of the Bombay stock Exchange,NSE,And the leading
commodity exchange in India(MCX & NCDEX)

Company Bussiness-

1)Equity trading.

2)Commodities.

3)Portfolio Management Services.

4)Mutual Funds.

5)Life Insurance.

6)Personal Loans.

7)IPO.
8)Depository Services.

9)Investment Advisory.

Company presences-
1)National-wide presences of 21 regional hubs present in 124 cities.
2)Over 7850 sub-brokers and business associates.
3)More than 6.5 lakh clients.

Angel Group

1)Angel Broking Ltd.

2)Angel capital & Debt Market Ltd.
3)Angel Commodities Broking Ltd.
4)Angel Securities Ltd.

Core Valves of Company-

1)Motto-
To have complete harmony between quality in process and continuous improvement to
deliver exceptional service that will delight our customer and client.

2)CRM Policy-Customer is king-

Customer is the most important person in our premises. He is not dependent on us but we are
dependent on him. He is not an interruption in our work but a part of it. We are not doing him
favors by serving it but he is doing favors on us by giving an oppournity to serve him.

3)Business Phisilophy –
1) Ethical practice & transparency in our all dealing.
2) Customer interest is above all.
3) Always deliver for what we have promise.
4) Effective cost management.

4)Quality Assurance Policy-

We are committed to provide the world-class services which exceed the expectation of our
customers achieved by team-work and by a process of continuous improvement.

Indian markets have recently thrown open a new avenue for retail investors and traders to
participate commodity derivatives. For those who want to diversify their portfolios beyond
shares, bonds and real estate, commodities are the best option.

Till some months ago, this wouldn't have made sense. For retail investors could have done very
little to actually invest in commodities such as gold and silver -- or oilseeds in the futures market.
This was nearly impossible in commodities except for gold and silver as there was practically no
retail avenue for putting in commodities.

However, with the setting up of three multi-commodity exchanges in the country, retail investors
can now trade in commodity futures without having physical stocks!

Commodities actually offer immense potential to become a separate asset class for market-savvy
investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity
markets may find commodities an unreliable market. But commodities are easy to understand as
far as fundamentals of demand and supply are concerned. Retail investors should understand the
risks and advantages of trading in commodities futures before taking a leap. Historically, pricing
in commodities futures has been less volatile compared with equity and bonds, thus providing an
efficient portfolio diversification option.

In fact, the size of the commodities as a whole of the industry segment in India is also quite a
significant industry, which constitutes about 58 per cent of the GDP.

Like any other market, the one for commodity futures plays a valuable role in information
pooling and risk sharing. The market mediates between buyers and sellers of commodities, and
facilitates decisions related to storage and consumption of commodities. In the process, they
make the underlying market more liquid.

CONCEPT OF SHARE TRADING IN INDIA:-

Trading in shares is old phenomena its regulation had been started when securities contract act
had been formed in 1956. Transfer of resources from those with idle resources to others who
have a productive need for them is most efficiently achieved through the securities market. It
provides a channel for reallocation of savings to investments.

SEBI

The Securities and Exchange Board of India (SEBI) is the regulatory authority in India
established under Section 3 of SEBI Act, 1992. SEBI Act, 1992 provides for establishment of
Securities and Exchange Board of India (SEBI) with statutory powers for (a) protecting the
interests of investors in securities (b) promoting the development of the securities market and (c)
regulating the securities market. Its regulatory jurisdiction extends over corporate in the issuance
of capital and transfer of securities, in addition to all intermediary rise and persons associated
with securities market. SEBI has been obligated to perform the aforesaid functions by such
measures as it thinks fit. In particular, it has powers for:

• Regulating the business in stock exchanges and any other securities markets
• Registering and regulating the working of stock brokers, sub–broker etc.
• Promoting and regulating self-regulatory organizations
• Prohibiting fraudulent and unfair trade practices
• Calling for information from, undertaking inspection, conducting
inquiries and audits of the stock exchanges, intermediaries, self –

regulatory organizations, mutual funds and other persons associated

with the securities market.

NSE
The National Stock Exchange of India Limited has genesis in the report of the High Powered
Study Group on Establishment of New Stock Exchanges. It recommended promotion of a
National Stock Exchange by financial institutions (FIs) to provide access to investors from all
across the country on an equal footing. Based on the recommendations, NSE was promoted by
leading Financial Institutions at the behest of the Government of India and was incorporated in
November 1992 as a tax-paying company unlike other stock exchanges in the country. On its
recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April
1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994.
The Capital Market (Equities) segment commenced operations in November 1994 and operations
in Derivatives segment commenced in June 2000.
BSE
Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now spanning
three centuries in its 133 years of existence. What is now popularly known as BSE was
established as "The Native Share & Stock Brokers' Association" in 1875.
BSE is the first stock exchange in the country which obtained permanent recognition (in 1956)
from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE
continues to innovate. In recent times, it has become the first national level stock exchange to
launch its website in Gujarati and Hindi.
 Objective & Methodology
Objective

The objective of my project is to bring awareness among the investors who are interested for share market but
don’t know the procedure to invest in share market.

Methodology

In order to achieve the objectives, the research method includes following steps:
1) SOURCES OF DATA.
2) DATA COLLECTION METHOD.
3) SAMPLING DESIGN.

SOURCES OF DATA: -

In this study I have collect both the primary and secondary data.

2.2 PRIMARY DATA:

Primary data is a first handed collected data. Primary data are obtained from the
opinion of the clients of commodity traders. I have collected this primary data here
by taking the opinion of the commodity trader.

2.3 SECONDARY DATA:

Secondary data are those data, which have been collected and compiled earlier for
some other purpose by various sources. I have collected the secondary data here in
following ways:

• Web resources
• Company journals
• Trade Magazines
2.4 DATA COLLECTION METHOD:

In marketing research, field survey is commonly is used to collect primary data from the
respondents.

I have taken a personal interview of commodity clients to collect the data to know the latest trend
prevailing in the commodity market.

I was able to meet 15 to 20 clients personally in my training period because they were the only
active clients for my firm. This itself involved extensive efforts.

2.5 METHODS OF DATA COLLECTION

There are two types of data -:

1) Primary data
2) Secondary data
 Data analysis & interpretation

Overview:-

India is the largest consumer of gold in the world. Liberalization in 1991 saw efforts to slowly
revive the gold market in the country with the other sectors of economy. Thus, since 1991,
demand for gold has been increasingly met by official imports. The results are obvious in the
form of reduced smuggling, unofficial premiums and enhanced government revenue, by way of
customs and sales tariffs. The increasing gold trade deserves an efficient bullion exchange in
India, for which there is a need to develop an efficient spot and forwards market, sufficient
liquidity, regular, safe and cheap supply system with good delivery standards are some of the
prerequisites for smooth functioning of a bullion exchange.

The recent decision of the International Monetary Fund & other central bankers against selling
gold for the next five years signifies the faith placed in this metal by the leading economies of
the world. Gold will continue to play a decisive role in world economy in the next millennium.

Why to invest in Gold:-

Gold responds when you need it most:-
Recent independent studies have revealed that traditional diversifiers often fall during times of
market stress or instability. On these occasions, most asset classes (including traditional
diversifiers such as bonds and alternative assets) all move together in the same direction. There is
no “cushioning” effect of a diversified portfolio — leaving investors disappointed. However, a
small allocation of gold has been proven to significantly improve the consistency of portfolio
performance, during both stable and unstable financial periods. Greater consistency of
performance leads to a desirable outcome — an investor whose expectations are met.

Gold is highly liquid:-

Gold can be readily bought or sold 24 hours a day, in large denominations and at narrow spreads.
This cannot be said of most other investments, including stocks of the world’s largest
corporations. Gold proved to be the most effective means of raising cash during the 1987 stock
market crash, and again during the 1997/98 Asian debt crisis. So holding a portion of portfolio in
gold can be invaluable in moments when cash is essential, whether for margin calls or other
needs

Sanctuary :

In unstable times, investors look to safeguard their capital by shifting it into assets deemed to be
a reliable depository of value. Gold provides a security against the capricious nature of paper
currency.

Assorted Portfolio :

A portfolio that holds widely varied investments is protected against market decline. Portfolios
comprising gold are reliable and secure.

Avoiding Inflation:
Although the purchasing capability of various currencies has largely fallen due to price hikes that
of gold has stayed amazingly steady. So, gold is purchased to offset the consequences of price
increases and currency instability.

Combat Dollar Instability:

Gold is frequently used as a convenient flight against dollar fluctuations. A rise in dollar value
leads to a drop in the gold price and a decrease in the dollar value results in an increase in the
gold price. Therefore, gold is considered useful in guarding against dollar instability.

Handling Risk:

A portfolio containing assets with minimal instability reduces risk and has a positive bearing on
anticipated returns. Gold is less susceptible to change and is hence a good investment.

Demand and supply:

The demand for gold has constantly exceeded supply mainly due to extended lead times that
occur in gold mining and growing income levels in major gold markets. The future gold scenario
looks bright and positive.

Indian Gold Market:-

India was the worlds’ largest gold market with Mumbai as the main trading center prior to 1962.
The government enacted the Gold Control Act in 1962 prohibiting the citizens of India from
holding pure gold bars and coins due to loss of gold reserves during the Indo-China war in 1962.
Only licensed dealers were allowed to deal in pure gold bars and coins. It was this legislation,
which killed the official gold market and a large unofficial market for gold sprung up dealing in
cash only. The gold was smuggled in and sold through the unofficial channel wherein many
jewelers and bullion traders traded in smuggled gold leading to the development of huge black
market for gold. Gold was smuggled into India in the size of 10-tola bars (called a TT bar in
trade parlance). The traditional Indian measure for gold is “tola”; a name derived from the
Sanskrit word “tula” for scale or balance. One tola is equal to 11.664 grams. Hence a 10-tola bar
weighs 116.64 grams.
The important feature of this 10-tola bar is that they don’t have serial number, unlike almost all
other cast bars available on the international market. This made ten-tola bar the gold currency of
choice, especially from 1947-1992 when India strictly regulated gold imports, giving rise to a
massive black market.

During 50’s and 80’s, the government had a controlled economy wherein all the factors of
production and resources were controlled and licensed. This led to the corruption and shortages
resulting in profiteering by the businesses.

It was in 1990 when India had a major foreign exchange problem; the Indian government
pledged 40 tons of gold from their gold reserves with the Bank of England to save the day.
Subsequently India embarked upon the path of economic liberalization.

Demand for Gold:-

India is the largest consumer of gold in the world. The recent figures of World Gold Council
exhibit that Indian demand for gold in 2006 was 843.2 tons, which comprises 26.2 % of the total
world demand. Most of the demand for gold appears to be for jewellery fabrication, and the rest,
estimated at 10 to 15 percent, is possibly meant to meet demand on account of investment and
Industrial and dental processes. This is sure to surprise many whlen India is considered a very
poor country with one of the lowest per capita incomes in the world.
Demand for Gold:
Demand for Jewellery:
Rural India
India has highest demand for gold in the world and more than 90% of this gold is acquired in the
form of jewelers. The demand for jewelry mainly comes from rural sector; about 65-70% of the
gold purchases are from rural India, which live upon agriculture for their livelihood. Since
agriculture is highly dependent on the rains, the rural disposable income depends upon weather;
hence a good year for agriculture assures higher demand for gold. The bulk of the Indian
jewelers buying is still rooted in tradition and jewellerry is sold in traditional designs.

The main reason for such high rural demand for gold is non-taxation of agricultural income. If
the agricultural income were taxed, the disposal income would substantially reduce resulting in
lower gold demand. In the rural areas, the womenfolk especially have a low level of education.
Hence the middle-aged rural Male invests more of their savings in gold so that womenfolk can
encase their wealth without any legal hassles. In south India, consumers prefer new designs with
the change in fashion trends, hence they sell off their jewelry when they become out of fashion
exchange for new jewelry. In north India, new purchases are done only when the ornaments are
broken and in some extreme cases.

About 95% of purchases are done by women .The demand for gold in north India increases
during festivals (mainly Diwali) and marriage season. The months from October to January,
April and May constitute the main marriage season and also have a large number of festivals.
Hence demand for gold is very strong during these months.

In south India demand is more or less uniform throughout the year as salaried people form the
major chunk of purchasers who invest their savings regularly in gold purchases. The figures of
the past few years show that Indian demand for gold has consistently been hovering around 25%
of total world demand. Jewelers designs vary in different regions of India, making the style
unique to each region. In south India the designs are inspired by nature - paisley motif of the
mango, rice grains, melon and cucumber seeds, etc. while In northern and western designs are
inspired by the meenakari (enameling) and kundan (setting of precious and semi-precious stones
in gold) styles to just give a few examples.

Urban India

Exposure to western influences and the media have spawned a consumerist culture. The entry of
modern gadgetry like laptops, cell phones and white goods has grabbed away a part of the urban
Indian’s disposable income. The lure of spending on these modern gadgets has taken precedence
over the older virtue of saving. Adding to it, the urban Indian has been exposed to alternate
forms of savings like equities and bonds via mutual funds, which have diminished their desire for
gold. In effect, dampening the urban demand for gold. The passion for gold between the urban
and the rural Indian has widened.
Demand for Investment:-
Private Holding of Gold bars in India was forbidden until 1990 due to Gold Control Act. There
was physical investment in smuggled ten tola bars, but it was limited and often amounted to
keeping a few bars ready to be made into jewelers. Gold investment essentially was in 22-carat
jewellery.
Since 1990 (after Gold control Act was abolished), investment in small bars, both imported ten
tolas and locally made small bars, which have proliferated from local refineries, has increased
substantially. GFMS estimate that investment has exceeded 100 tons (3.2 million-oz) in some
years, although it is hard to segregate true investment from stocks held by the 16,000 or more
gold dealers spread across India.
 FINDINGS

➢ Commodity market is still in the nascent stages in India as it is an emerging market.

➢ Commodity market not totally based on the “Demand & Supply” forces prevailing in the
market and day traders still have the power to manipulate the daily trading somewhat..

➢ The player (Speculators) creates the bull and bear situation in the commodity market based
on money power and profit booking motives.

➢ I also found that If there is no speculation in the market then nobody is interested to
participate in the trading, as the real motive still is the speculation. Although I personally feel
that the maturity to the market will come only of the market is used by large number of
players to hedge.

➢ Initially Farmers and general people are not that much aware about the commodity market.
But with the development of technology and general awareness the farmers and general
public have started gaining profit from these markets

➢ The commodity market is currently only concerned with the future contracts of 1 month and
3 month maturity and this should further be expanded.

➢ The business in the commodity market is a very risky in nature mainly due to above stated
reason of real motive being the speculation.
➢ Generally the role of hedgers is done by farmers. Farmers settle down their profits by doing
trading in MCX markets. Although it may not be happening to that extent.

➢ Generally the people who do not have money to take the delivery they do the role of
arbitersury to gain the profit by trading in two markets.

➢ These markets are also very useful to jewelry traders. They trade on both side i.e. on their
shop and in MCX markets to settle down their profits or loss

CONCLUSION

India is one of the top producers of a large number of commodities and also has a long history of
trading in commodity and related derivatives. The market has made enormous progress in terms
of technology, Transparency and trading activity. Interestingly this have happen only after the
govt protection was removed from the number of commodity and market forces were allowed to
play their role. This should act as a major lesson for the policy makers in developing countries
that pricing and price risk management should be left to the market forces rather than try to
achieve these through administered price mechanisms. The management of price risk is going to
assume even greater importance in future with the promotion of free trade. In short I want to say
that, today the commodity market not only limited to the particular country but it also spread
across the world.

➢ India is the second largest market in the world after the China.

➢ In commodity market, there is no delivery based market activity. Only the contracts are
taking place.
 ➢ Large traders (e.g. MNC’s) maintain large stock of the quantity and play speculation in
the market.

➢ The “Holding Capacity” of participating traders is very strong.

➢ General people and framers are not that much aware about the commodity market, so the
speculators and the gamblers are taking the advantage of commodity market.

BIBLOGRAPHY

WEBSITE

www.google.com

www.sebiindia.com

www.bseindia.com

www.scribd.com

www,angelbroking.com

www.mcx.com