AURORA’S POST GRADUATE COLLEGE (MBA/MCA)

PEERZADIGUDA, UPPAL

PROJECT SYNOPSIS ON
(COMMODITY PRICE MOVEMENTS)

SUBMITTED BY

(AULUGALA GEETHENDAR KUMAR)

HALL TICKET NUMBER: 1304-20-672-160

 A

SYNOPSIS REPORT

ON

COMMODITY PRICE MOVEMENTS

AT

ICICI SECURITIES LIMITED

Submitted

By

AULUGALA GEETHENDAR KUMAR

H.T.NO: 1304-20-672-160

PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
PEERZADIGUDA, UPPAL
(Affiliated to Osmania University)
2020-2022
 Aurora’s PG College ,Peerzadiguda, Uppal
Department of Management

SYNOPSIS

Title of the Project : COMMODITY PRICE MOVEMENTS

Student Name : AULUGALA GEETHENDAR

KUMAR

Hall Ticket Number : 1304-20-672-160

Signature of the Student :

Signature of the Guide :

INTRODUCTION
moveable property other than actionable claims, money and securities”. Or any product that can be
used for commerce or an article of commerce which is traded on an authorized commodity exchange
is known as commodity.
The commodity futures trading, consists of a futures contract, which is a legally binding agreement
providing for the delivery of the underlying asset or financial entities at specific date in the future.
Like all future contracts, commodity futures are agreements to buy or sell something at a later date
and at a price that has been fixed earlier by the buyer and seller. So, for example, a cotton farmer may
agree to sell his output to a textiles company many months before the crop is ready for actual
harvesting.
Commodity Market
The commodity market is a market where forwards, futures and options contracts are traded on
commodities. Commodity markets have registered a remarkable growth in recent years. The stage is
now set for banks to trade in commodity futures. This could help producers of agricultural products
bankers and other participants of the commodity markets. Banks have started acknowledging the
commodity derivatives market. In this context the Punjab National Bank and the Corporation Bank
have sanctioned loans worth Rs 50 crore to commodity futures traders over the past six months.
In the present global economic scenario, due to various factors such as inflation, political factors,
natural factors, the variations in prices of all commodities are a natural phenomenon. So,from the
point of the cultivators of the commodity (in case of agricultural products) or dealers in the metals,
there is a genuine need for them, an instrument with which they can hedge their risks. Thus, a
commodity future is one of the most important derivative securities. With this they will be able to
reduce risks.
Consequently, the speculators who play an important part, in determining the price also come in the
picture. Thus with the help of their speculative expertise, it can also be a very lucrative investment
opportunity. Through this, project, an attempt is made to prove that commodity futures can be used
effectively as a risk reduction instrument and also as a very good investment opportunity.The futures
market in commodities offers both cash and delivery-based settlement. Investors can choose between
the two. If the buyer chooses to take delivery of the commodity, a transferable receipt from the
warehouse where goods are stored is issued in favour of the buyer. On producing this receipt, the
buyer can claim the commodity from the warehouse. All open contracts not intended for delivery are
cash-settled. While speculators and arbitrageurs generally prefer cash settlement, commodity stockiest
and wholesalers go for delivery. The option to square off the deal or to take delivery can be changed
before the last day of contract expiry. In the case of delivery-based trades, the margin rises to 0-25%
of the contract value and the seller is required to pay sales tax on the transaction.Trading in any
contract month will open on the twenty first day of the month, three months prior to the contract
month. For example, the December 2005 contracts open on 21 September 2005 and the due date is the
20-day of the delivery month. All contracts settling in cash will be settled on the following day after
the contract expiry date. Commodity trading follows a T+1 settlement system, where the settlement
date is the next working day after expiry. However, in case of delivery-based traders, settlement takes
place five to seven days after the expiry.
NEED OF THE STUDY
One of the single best things you can do to further your education in trading commodities is to keep
thorough records of your trades. Maintaining good records requires discipline, just like good trading.
Unfortunately, many commodity traders don’t take the time to track their trading history, which can
offer a wealth of information to improve their odds of success Most professional traders, and those
who consistently make money from trading commodities, keep diligent records of their trading
activity. The same cannot be said for the masses that consistently lose at trading commodities.
Losing commodity traders are either too lazy to keep records or they can’t stomach to look at their
miserable results. You have to be able to face your problems and start working on some solutions if
you want to be a successful commodities trader. If you can’t look at your mistakes and put in the work
necessary to learn from them, you probably shouldn’t be trading commodities.
. SCOPE OF THE STUDY
The study mainly focuses on Indian commodity market, its history and latest developments in the
country in commodities market (Silver, Gold and Cotton). The study also keeps a birds-eye view
OBJECTIVES OF
on global commodity THEand
market STUDY
its development. The study vastly covered the aspects of
commodity trading (Silver, Gold and Cotton), clearing and Settlement mechanisms in Indian
 To study
commodity exchanges.
aboutThe scope
major of the study
exchanges is limited
trading to Indian
in Indian commodity
commodity market
market.
 To study about participants in Indian derivative market.
A network of 2500 business locations spread over 500 cities across India facilitates the
 To understand the basics of commodity market and to discover the
smooth acquisition and servicing of a large customer base. Most of our offices are
Emerging prospects (Silver, Gold and Cotton) In the Indian commodity market.
connected with the corporate office in Mumbai with cutting edge networking technology.
Thegroup
To empathize trading
helps service andthan
more settlement mechanism
a million customers,forover
commodities
a variety of mediums viz.
(Silver,
online; we cannotGold andallCotton)
study the dataIninIndian stock exchange.
the organization.
 To know how exactly the commodities are traded through the trading Desks and what
happens in the market.
 To identify the working procedure of the commodity trading practices in India.
 To identify the perception of investors in commodities market.
 The Study aims at understanding the governance for commodity

Derivatives exchanges, traders, investors and other participants

RESEARCH METHODOLOGY
The present study is conducted to provide information to the company regarding the investor
perception towards commodity market.

SOURCES OF DATA
Primary data

Data was collected in systematic manner by meeting the existing investors in commodity market &
other individuals.
Primary and secondary data were utilized for the purpose of the study by the researcher.
The research is aimed to obtain the data mainly through primary sources. Survey method has been
used to obtain information.
Secondary data
Secondary data was collected from companies and from commodities (Silver, Gold and Cotton)
trading websites.

TYPE OF RESEARCH
Based on the objectives of the study, the descriptive research method is used. Descriptive study is
taken up when the researcher is interested in knowing the investor perception in commodities market.
The conclusions are arrived at from the collected data. Statistical tools were used to analyze the data
collected from the survey.

SURVEY METHOD

A survey was conducted amongst the investors in Hyderabad and Secunderabad. The researcher
personally met the investors, interviewed them and got their questionnaires filled.
INSTRUMENT DESIGN

In order to obtain information the researcher prepared a structured questionnaire. The researcher
prepared a single questionnaire according to the need of the data from the respondent.

PRE-TESTING OF QUESTIONNAIRE
The researcher to remove questions that are of vague and ambiguity in the nature conducted the pre-
testing. The samples of 10 respondents were selected and the questionnaire was pre-tested and the
researcher made necessary modifications.

CODING AND TABULATION

After the survey was conducted, the data had to be converted in to statistical or
numerical form so that inference could be drawn about the sample collected. For this, every
option of every question was coded into alphabets (i.e; they would be represented in
alphabets). The alphabets were used to denote the option and no ranking order was used. The
coded data was entered into the data sheet. Frequencies were found out for each option and
thus giving us the percentage of the option usage, etc.
LIMITATIONS OF THE STUDY

 The survey was confirmed to the surroundings of twin cities Hyderabad &
Secundrabad.
 The investor’s response could have been biased.
 Time of 6 weeks was constraint for the study.
 Brokers can only transact futures trades if they are registered with the CFTC and the
NFA.
 Only certain types of commodities (Silver, Gold and Cotton) can be the basis for
futures trading.