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Transcript of Naresh Angel
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
ARESEARCH PROJECT
ON“INVESTORS’ PERCEPTION OF
COMMODITY FUTURES”(Conducted for Pristine Angel Broking Ltd)
Submitted by
NARESH KARNAVATRoll No. 912
Enrollment No: 097210592053
K.J. INSTITUTE OF MANAGEMENTVADASMA
(Gujarat Technological University)July, 2010
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
GUIDE CERTIFICATE
I hereby declare that the research work embodied in this dissertation
entitled “INVESTORS PERCEPTION OF COMMODITY FUTURES” has been
undertaken and completed by KARNAVAT NARESH G under my guidance
and supervision. I also certify that he has fulfilled all the requirements under the
covenant governing the submission of dissertation to the GUJARAT
TECHNOLOGICAL UNIVERSITY for the award of MBA Degree.
Place: Palanpur
Date:
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CERTIFICATE
This is to certify that Mr.KARNAVAT NARESHKUMAR G. a student of K.J.Institute
of Management, Vadasma has submitted his Summer Project titled “INVESTORS
PERCEPTION OF COMMODITY FUTURES” in the year 2010-2011 as a part of
curriculum of Gujarat Technological University.
Dr.R.K.Shrikhande
Director Project Coordinator
Date:
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
DECLARATION
I, hereby, declare that summer Project titled, “INVESTORS PERCEPTION OF
COMMODITY FUTURES” is original to the best of my knowledge and has not been
published elsewhere. This is for the purpose of partial fulfillment of M.B.A. degree
affiliated with Gujarat Technological University.
Student Name Signature
(KARNAVAT NARESH G.)
(ENROLLMENT NO: 097210592053)
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
PREFACE
The MBA programme is specially designed professional course that enables and prepare
the students for the practical world. It offers various practical projects like the summer
internship projects that gives a chance to students to enter in industry and work with the
real professionals and help the students to understand how the industry is working and
what are the real problems and opportunities with which the industry actually deal.
It is also one of the important projects as in MBA program practical approach and
knowledge is equally important as theoretical issue. The summer report also provides an
important opportunity to students to relate their theoretical knowledge to practical issues
in real professional world.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
ACKNOWLEDGEMENT
I take this opportunity to extend my sincere gratitude to the respondents who
gave all the support and had been cooperative in providing all the valuable
required information without which I would not have completed my report. I
would also like to thank K. J. INSTITUTE OF MANAGEMENT, and
Mr.PARESH PATEL ( ANGEL BROKING ) for the constant guidance,
encouragement and motivation they extended throughout the study.
I also thank my parents and friends for their co-operation, support and
encouragement extended throughout the study.
Thank you
STUDENT NAME.
(KARNAVAT NARESH G.)
(ENROLLMENT NO: 097210592053)
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
EXECUTIVE SUMMARY
As a partial fulfillment of my MBA curriculum I have undergone summer training in
“ANGEL BROKING” at PALANPUR branch from 1st June 2010 to 20th July 2010. The
Angel Group has emerged as one of the top 5 retail stock broking houses in India, having
memberships on BSE, NSE and the two leading commodity exchanges in the country i.e.
NCDEX and MCX. Angel Broking Ltd is also registered as a depository participant with
CDSL. Angel has exceeded customer’s expectations by providing world-class service. I
was placed under the Financial and Broking and I have learned a lot in carrying out
financial task for Angel Broking. I have done mainly to prove that commodity futures
can be used as a risk reduction instrument, I have also carried out a project during
summer training. The title of my project is “Investors’ Perception of Commodity Futures
in palanpur city area”
The questionnaire was used as data collection instrument and both open ended and close
ended type of questions were used as per the requirement. From the survey it was found
that Commodity future is a good investment opportunity prevalent in the market and Risk
can be reduced by commodity futures by using varies risk management techniques. More
details about the project are available in later part of this report.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
TABLE OF CONTANTS
CHAPTERS NO.
TOPIC PAGE NO.
Chap-1 INTRODUCTION TO THE TOPIC
The Indian financial system.
Guidelines by the RBI pertaining to commodity
future trading.
Security and exchange board of India.
SEBI guidelines for commodity futures trading.
8-17
811
1315
Chap-2 RESEARCH DESIGN
Objective of the study.
Research methodology.
19-21
1820
Chap-3 COMMODITY FUTURES
The history of trading
Definition of commodity.
Definition of commodity future.
Growth of commodity futures in India.
Commodity trading affects the economy.
Investor’s choice.
The role of the exchange in future trading.
22-25
Chap-4 RISK ASSCIATED WITH COMMODITY
FUTURES TRADING.26
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
TOPIC
PAGE NO.
Chap-5 THE VARIOUS RISK MANAGEMENT TECHINQUES USED IN COMMODITY FUTURES TRADING.
27
Chap-6 COMPANY PROFILE introduction angel group membership location angel intensive research process
28-30
Chap-7 SWOT ANALYSIS31
Chap-8 DATA ANALYSIS Angel Services. Guideline for risk management. Angel Product.
32-37
Chap-9 FINDING AND INTRERPRETATION Analysis & Interpretation
38-5657-62
Chap-10 CONCLUSION63-66
Chap-11 APPENDIX Questionnaire
BIBLIOGRAPHY72
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-1 INTRODUCTION TO THE TOPIC
THE INDIAN FINANCIAL SYSTEM
The Indian financial system consists of many institutions, instruments
and markets. Financial and cheques, to the more exotic futures swaps of high
finance.
The Indian financial system is broadly classified into 2 Broad Groups:-
1. Organized Sector
2. Unorganized Sector
1. ORGANISED SECTOR:-
The organized sector consists of: -
Unorganized markets:-
The financial transactions, which take place outside the well-established exchanges or
without systematic and orderly structure or arrangements constitutes the
unorganized markets. They generally refer to the markets in the villages.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
The financial syst The Financial System
___________________________|__________________________ | | Organized sector Unorganized
Sector
| |__________|______________________________________| | | |
Financial Market
Services Institution Instrument
| | |_____
Other
Non-intermediaries
Intermediaries
Regulatory
Organized Unorganized Primary Secondary
__________|_____________ __________|____________ | | | | |
Capital market
Money market Short term
Medium term
Long term
10
Money lender
Land lords
Pawn brokers
Traders
Indigenous
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
iii. Financial instruments:-
Financial instruments constitute of securities, assets and claims. Financial securities are
classified as primary and secondary securities.
The primary securities are issued by the companies directly to the ultimate savers as
ordinary shares and debentures.
While the secondary securities are issued by the financial intermediaries to the
ultimate savers as bank deposits, insurance policies so and on.
iv. Financial services:-
The term financial service in a broad sense means “Mobilizing and allocating
savings”. Thus, it can also be offered as a process by which funds are mobilized from
a large number of savers and make them available to all those who are in need of it,
particularly to the corporate customers.
2. THE UNORGANIZED SECTOR:-
The unorganized financial system comprises of relatively less controlled money
lenders, indigenous bankers, lending pawn brokers, land lords, traders etc. This
part of the financial system is not directly controlled by RBI.
.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
GUIDELINES BY THE RBI* PERTAINING TO COMMODITY FUTURE TRADING
These guidelines cover the Indian entities that are exposed to commodity price risk.
1. A brief description of the hedging strategy
Proposed:-
Description of business activity and nature of risk.
Instruments proposed to be used for hedging.
Exchanges and brokers through whom the risk is proposed to be hedged and credit
lines proposed to be available.
The name and address of the regulatory authority in the country concerned may
also be given.
Size/average tenure of exposure/total turnover in a year expected.
2. Copy of the risk management policy approved by the Board of
Directors covering:-
Risk identification
Risk measurements
Guidelines and procedures to be followed with
respect to revaluation/monitoring of positions.
Names and designations of the officials authorized
to undertake transactions and limits.
3. Any other relevant information:-
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
The authorized dealers will forward the application to Reserve Bank along
with copy of the Memorandum on the risk management policy placed before the
Board of Directors with specific reference to hedging of commodity price
exposure. .
i All standard exchanges traded futures will be permitted
ii. Tenure of exposure shall be limited to 6 months. Tenure beyond 6 months would
require Reserve Bank’s specific
approval.
iii. Corporate who wish to hedge commodity price exposure shall have to ensure
that there are no restrictions on import/export of the commodity hedged under
the Exim policy in force.
After grant of approval by Reserve Bank, the corporate concerned should
negotiate with off-shore exchange broker subject, inter alia, to the following:-
Brokers must be clearing members of the exchanges, with good financial
track record.
Trading will only be in standard exchange- traded futures
contract/options .
Source from www.rbi.org
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
SECURITIES AND EXCHANGE BOARD OF INDIA
SEBI was setup in April 12, 1988. To start with, SEBI was set up as a non-statutory body.
It took 4 years for the government to bring about a separate legislation in the name of
securities and exchange board of India Act, 1992, conferring statutory powers over
practically all aspects of capital market operations.
Objectives of SEBI
To protect the interest of investors so that there is a steady flow of savings into the
capital market.
To regulate the securities market and ensure fair practices by the issuers
of securities, so that they can raise resources at minimum cost.
To provide efficient services by brokers, merchant bankers and the
other intermediaries, so that they become competitive and professional.
Functions of SEBI
Sec 11 of the SEBI act specifies the functions as follows:-
Regulation of the stock exchange and self-regulatory organizations.
Registration and regulation of stock brokers, sub-brokers, registrar to all
issue, merchant bankers underwriters, portfolio managers and such other
intermediaries who are associated with securities market.
Regulation and registration of the working of collective investment schemes
including Mutual funds.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Prohibition of fraudulent and unfair trade practices relating to security
market.
Prohibit insider trading in securities.
Regulation substantial acquisitions of shares and take over of companies.
SEBI* GUIDELINES FOR COMMODITY FUTURES TRADING
There are many regulatory authorities, which are monitoring commodity
futures trading, one of them is SEBI. The following Report is one of the
regulatory frameworks for the commodity futures trading.
The following were the recommendations:-
1) Participation of Securities Brokers in Commodity Futures Market
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
The committee was of the unanimous view that participation of
intermediaries like securities brokers in the commodity futures market is
welcome as it could inter-alia increase the number of quality players
infuse healthy competition, boost trading volumes in commodities and in
turn provide impetus to the overall growth of the commodity market.
Since the commodity market falls under the regulatory purview of a separate
regulatory authority viz., Forward Market Commission, to ensure effective
regulatory oversight by the Forward Market Commission, and to avoid any
possible regulatory overlap, the pre-condition for such entry by intending
participating securities brokers in the commodity futures market would be
through as separate legal entity, either subsidiary or otherwise. Such entity
should conform from time to time to the regulatory prescription of Forward
Market Commission, with reference to capital adequacy, net worth,
membership fee, margins, etc.
The committee took note of the fact that the existing provisions of the
Securities Contract (Regulation)Rules 1957 forbid a person to be elected as a
member of a recognized stock exchange if he is engaged as principal on
employee in any business other than that of securities, except as a broker or
agent not involving any personal financial liability. The Committee
recommended that the above provisions in the Securities Contract
(Regulations) Rules be removed/amended suitably to facilitate
securities brokers participation/engagement in commodity futures.
An important felt need was the necessity to improve market awareness of
trading and contracts in commodities. The committee there for
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
recommendation the forward market commission take appropriate
initiatives in training the market participants.
2) Risk containment measures
In the background of the Forward Market Commission’s report on risk
containment measures currently obtaining in commodity markets and
the committee’s recommendation to permit security brokers’
participation in commodities markets only through a separate legal entity,
the committee consider ensuring strict compliance of the
regulatory prescriptions like net worth, capital adequacy, margins exposure
norms, etc., by the respective market regulators, and due oversight
would be an adequate safeguard ensure that the risks are not transmitted from
one market to the other.
3) Utilization of existing infrastructure of stock exchanges
On the issue of convergence/integration the securities market and
commodities market, that is of allowing stock exchanges to trade in
commodity derivatives and vice versa, the committee was of the view that in
the current statutory and regulatory framework existence of two separate and
established regulators, the issue of integration of the two markets would
require detailed examination, particularly for the purpose of defining clearly
the scope of regulatory purview and responsibility. Also, given the
concerns raised by a section of members that such integration may lead to
further fragmentation of volumes and liquidity in the nascent commodity
markets, the committee was of the view that the issue of markets could be
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
taken up for consideration at a future date as the two markets mature
further.
Source from www.sebi.com
CHAP ;-2 RESEARCH DESIGN
OBJECTIVES OF THE STUDY
Main objective of this study
To prove that commodity futures can be used as a risk reduction instrument and also as
an investment opportunity.
sub-objectives of this study
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
1. To study the various analysis tools used to make price movement predictions.
2. To study the growth of commodity futures trading.
3. To study the perception of investors of commodity futures (questionnaire).
OPERATIONAL DEFINITIONS
Short selling
Selling first is known better as ‘shorting’ or ‘short selling’. In futures trading, since one
is taking a future delivery, its just as easy to sell first and then buy later. To offset
the obligation to deliver, all one needs to do is to buy back the Contract prior to the
expiration of the Contract.
Margin
A margin refers to a good faith deposit made by the person who wants to buy or sell a
Contract in a futures exchange. It is a small percentage of the value of the
underling commodity represented by the Contract, generally in the neighborhood of 2
to 10%.
Leverage
Leverage is the ability to buy or sell $100,000 of a commodity with a $5000
security deposit, so that small price changes can result in huge profits or losses.
Maintenance margin
Maintenance margin is the amount which must be maintained in ones account
as long as the position is active.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Margin call
If the equity balance in the account falls below the maintenance margin level,
due to adverse market movement, the account holder will be issued a margin call.
Lot
A lot refers to the number of Contract that one wishes to buy or sell.
Tick
A tick refers to the minimum price fluctuation, is a function of how the prices are quoted
and set by the exchange.
Float
Float refers to the concept, when an investor who has taken a position, but does not want
to liquidate his position at close of the market.
Limit up/down
It refers to the maximum amount that the market can move above or below the previous
day’s close in a single trading session. If the price moves up it is known an ‘limit up’,
when the price moves down its is known as ‘limit down’.
RESEARCH METHODOLOGY
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
In this study primary analytical research method is used, which includes
questionnaire, tabulation analysis. This is one of the most important methods.
SOURCES OF DATA
The various sources of data are:
1. Primary Sources, which includes questionnaire, and a survey.
TOOLS FOR DATA COLLECTION
The questionnaire is the tool used for data collection.
ANALYSIS AND INTERPRETATION
The various tools for analysis used are graphs, charts, percentage growth, secondary data.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-3 COMMODITY FUTURES
THE HISTORY OF TRADING
Although the first recorded instance of future trading Occurred with rice in
17th century Japan, there is some evidence that there may also have been rice futures
traded in China as long as 6000 years ago.
Futures trading are a natural outgrowth of the problems of maintaining a year-round
supply of seasonal products like agricultural crops. In Japan, merchant stored rice in
warehouses for future use. In order to raise cash, warehouse holders sold receipts
against the stored rice. These were known as “rice tickets”. Eventually, such rice tickets
became accepted as a kind of general commercial currency. Rules came into being to
standardize the trading in rice tickets.
In the United States, futures trading started in the grain markets in the middle of
the 19th century. The Chicago Board of Trade was established in1848. In the 1870’s
and 1880’s the New York coffee, cotton and produce exchanges were born. Today there
are ten commodity exchanges in the United States. The largest are the Chicago Board
of Trade the Chicago Mercantile Exchange, the New York Mercantile Exchange, New
York Commodity Exchange and the New York Coffee, Sugar and Cocoa Exchange.
Worldwide there are major futures trading exchanges in over 20 countries including
Canada, England, France, Singapore, Japan, Australia and New Zealand. The products
traded range from agricultural staples like Corn and Wheat to Red Beans and Rubber.
22
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
What is a commodity?
Corn coffee silver soybean
Commodities are agreements to buy and sell virtually anything except, for some
reason, onions. The primary commodities that are traded are oil, gold and agricultural
products. Since no one really wants to transport all those heavy materials, what is
actually traded are commodities futures contracts or options. These are agreements to buy
or sell at an agreed upon price on a specific date.
What is a commodity future?
Commodities futures, or futures contracts, are an agreement to buy or sell a commodity at
a specific date in the future at a specific price. Just like the price of bananas at the
grocery store, the prices of commodities can change on a weekly or even daily basis.
If the price goes up, the buyer of the futures contract makes money, because he
gets the product at the lower, agreed-upon price and can now sell it at the higher,
market price. If the price goes down, the seller makes money, because he can buy the
commodity at the lower market price, and sell it to the buyer at the higher,
agreed-upon price. Of course, if commodities traders had to actually deliver the
product, very few people would do it. Instead, they can fulfill the contract by
delivering proof that the product is at the warehouse by paying the cash difference or by
providing another contract at the market price. Futures contracts perform two
important functions : price discovery and hedging of price risk in a commodity.
In international bourses traders can also use financial instruments like call
and put options, not yet allowed in India. Futures contracts are useful for the
producer because he can get an idea of the price likely to prevail and thereby help
them quote a realistic price and hedge risk
23
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Growth of commodity futures in India
Investment in India has traditionally meant property, gold and bank deposits. The
more risks taking investors choose equity trading. But commodity trading never forms a
part of conventional investment instruments. As a matter of fact Future trading in
commodities was banned in India in mid 1960’s due to excessive speculation. India has
three national level multi commodity exchanges with electronic trading and settlement
systems. The National Commodity and Derivative Exchange (NCDEX). The Multi
Commodity Exchange of India (MCX) and the National Multi Commodity Exchange of
India (NMCE) the National Board of Trading in Derivatives (NBOT), offers trading on
a national level, but is not completely online.
Commodity trading affect the economy
Commodity trading impacts the economy by making public the analysts forecasts of
future prices of the most important market goods. For example, one of the most widely
watched commodities is oil. The price of oil changes daily, which has an impact on
every good and service produced in the U.S economy. As traders take into
account all information regarding oil supply and demand, as well as geopolitical
considerations, this affects oil prices. It is these assumptions behind oil prices that
affect the economy so significantly.
Investor’s choice
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 favor 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 stock list and wholesalers go for delivery. The options to square of the
deal or to take delivery can be changed before the last date of contract expiry. In the
case of delivery- based trades, the margin rises to 20-25% of the contract value and the
seller is required to pay sales tax on the transaction.
24
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
The Role of the exchange in futures Trading.
1) Risk Transfer:-
In a futures transaction , risk is inherent part of doing business. The exchange
provides a setting where risk can be transferred from the hedgers to the speculators.
2) Liquidity:-
If risk is to be transferred efficiently, there must be a large group of individuals
ready to buy or sell. When a hedger wants to sell futures contracts to protect his
business position, he needs to know whether he can effect the transaction quickly.
The futures exchange brings together a large number of speculators, thus making
quick transaction possible.
3 ) Standardization:-
The exchange writes the specifications for each contract, setting standards of grading,
measurement methods of transfer, and times of delivery. By standardizing the
contracts in this manner, the exchange opens the futures market to almost anyone
willing to hedge risk. In the pits, then, the auction process is facilitated because only the
price must be negotiated.
25
TYPES OF RISK
OPERATIONAL RISK MARKET RISK LIQUIDITY RISK
TYPES OF RISK
OPERATIONAL RISK MARKET RISK LIQUIDITY RISK
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-4 RISK ASSOCIATED WITH COMMODITY
FUTURES TRADING
The different types of risks in Commodity Futures
Operational risk:-
The risk that, errors (or fraud) may occur in carrying out operations, in placing
orders, making payments or accounting for them.
Liquidity risk:-
Although commodity futures markets are liquid mostly, in few adverse situations, a
person who has a position in the
market, may not be able to liquidate his position.
Market risk:-
It is the risk of adverse changes in the market price of a commodity future.
26
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-5 The various risk management techniques used in
Commodity Futures Trading.
There are mainly 3 techniques ,
1. Averaging
2. Switching
3. Locking
Averaging:-
Averaging is a technique used when there is an existing position, and the price
moves adversely. And then at that particular price, enter into a similar new position.
Then take the average of these 2 prices. And when the price moves to that price
liquidate the position.
Switching:-
Switching is yet another risk management technique, when, there is an existing
position, and the prices move adversely and gives all indication that it will go in the same
direction for still some while. Then we have to liquidate the first position and enter a
new and opposite position at the same price.
Locking:-
Locking is yet another risk management technique, where, when there is an existing
position, and the prices move adversely and give an indication that it will move in
that direction, but it will come back to its original position. Here two processes are
involved ‘locking and ‘unlocking’. It is the process where there is an existing position,
and the price moves adversely, we ‘lock’ by entering into a new opposite position.
And then when the second price reaches a point where it will bounce back, we
‘unlock’ by liquidating the second position and book profits, and then finally when the
price reaches somewhere near the first position, liquidate the position, whereby
we can minimize the loss.
27
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:- 6 COMPANY PROFILE
INTRODUCTION
Angel broking trust with excellence in customer relation began more than 20 year
ago. Today Angel broking has emerged as premium investment sub-broker and
wealth management house with an absolute focus on real business and commitment to
provides real value for money to all its clients. Promoted by MR.DINESH THAKKAR,
Angel started in 1987 As sub broker is a present across the country provide equity
investment solution to individual clients through multiple channel retail, phone ,
trade and internet platform. The commitment to provides world - class broking service to
the Indian investor and a customer centric work culture has led to several innovation in
the areas of the technical, quality management , HR process giving Angel unique work
culture and edge over the players in the industry. Clients value Angel of its strong
research led investment ideas superior clients service track record and exceptional
execution skill.
ANGEL GROUP MEMBERSHIPS
BSE
NSE
NCDEX AND MCX COMMODITIES.
Angel has the largest NO of NSE registered Sub – brokers.
We have the third largest volume on BSE.
28
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
ANGEL WAS AWARED THE CONVETED
“MAJOR VOLUME DRIVES.”
TROPHY FOR 3 CONSECUTIVE YEAR.
2007 – 2008
2008 – 2009
2009 – 2010
LOCATION
In a span of less than 20 year. Angel has emerged as a leading retail broking group with a
nation side presence through its:
15 Regional Hubs and 82 branches.
3800 + intermediaries.
Direct team strength of 3000 +.
3.8 lac + customers.
Angel Research team:-
( A ) Angel broking limited is the first broking house in the county To have initiated
retail focused research since the year 2000.
( B ) 50 + member team doing fundamental , technical ,Commodities analysis.
( C ) One of the largest research teams in the industry for small And mid-cap.
29
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
ANGEL INTENSIVE RESEARCH PROCESS
Industry wise specialized teams:-
( A ) Top down approach:-
Identifying promising sectors and then companies with Good valuations.
( B ) Bottom-up approach:-
Identifying under-valued stocks with sound management.
Company visits and interaction with top and second line of managers.
Through analysis of company financial data and industry trends.
Estimates for future year earnings based on industry trends and Company business
plans.
30
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-7 SWOT ANALYSIS
The SWOT analysis is an extremely useful tool for understanding and
decision-making for all sorts of situations in business and organizations. SWOT is an
acronym for Strengths, Weaknesses, Opportunities and Threats.
ANGEL BROKING SWOT ANALYSIS:-
STRENGTHS
Financial resources.
Product skill.
Angel broking team is experienced in the trading.
WEAKNESSES
Service
Lack of skill with staff
OPPORTUNITIES
Several additional client groups.
Faster market growth.
Entry into new market.
THREATS
Other trading company.
Other banking service
31
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-8 DATA ANALYSIS
SERVICES
PROTFOLIO MANAGEMENT SERVICES:-
Successful investing in Capital Markets demands ever more time and expertise.
Investment Management is an art and a science in itself.
Professional Investment Management Services are no longer
the privilege of only large institutional investors.
Portfolio Management Services (PMS) is one such service
that is fast gaining eminence as an investment avenue
of choice for High Net worth Investors like you. PMS is
a sophisticated investment vehicle that offers a range of
specialized investment strategies to capitalize on
opportunities in the market. The Portfolio Management
Service combined with competent fund management,
dedicated research and technology, ensures a rewarding
experience for its clients. Angel PMS brings with it years of
experience, expertise, research and the backing of India's
leading stock broking house. At Angel, experienced portfolio
management is the difference. You will enjoy a relationship with a portfolio
manager equipped to design and implement a portfolio around your unique needs.
We will advise you on a suitable product based on factors such as your investment
horizon return expectations and risk tolerance. By entrusting the management of
your Portfolios to Angel, you can enjoy convenience without compromising on
quality.
32
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
PRIVATE CLIENT GROUP:-
Angel offers personalized advisory services to affluent HNI investors and actively
assists them in managing their portfolio. PCG can seek guidance on specific stocks
in their portfolio and can get active advice for timely exit and fresh investments. Here
we also design customized products and services for our clients based on there risk
profile, returns need and time horizon. Our experienced research team in-depth
analysis and customized value added products and services give us an immense
advantage in assisting you to generate wealth on a longer and consistent basis.
INVESTMENT ADVISORY:-
To derive optimum returns from equity as an asset class requires professional
guidance and advice. Professional assistance will always be beneficial in wealth
creation. Investment decisions without expert advice would be like treating ailment
without the help of a doctor.Strong research has always been our forte. Our investment
advisory department is backed by an experience research team. This team comprises
of 12 sector special analysts and a Research Head. Their vast experience and
expertise in spotting great investments opportunities has always been beneficial for our
clients.
33
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
( A ) Expert Advice:-
Our expert investment advisors are based at various branches across India to
provide assistance in designing and monitoring portfolios.
( B ) Timely Entry & Exit:-
Our advisors will regularly monitor your investments and will guide you to book
timely profits. They will also guide you in adopting switching techniques from one
stock to another during various market conditions. Our advisors will regularly monitor
your investments and will guide you to book timely profits. They will also guide you in
adopting switching techniques from one stock to another during various market
conditions.
( C ) De-Risking Portfolio:-
A diversified portfolio of stocks is always better than concentration in a single
stock. Based on our research, we diversify the portfolio in growth oriented sectors and
stocks to minimize the risk and optimize the returns.
DEPOSITORY SERVICES:-
You must be aware that Angel Broking Ltd has started its depository services by
registering with CDSL. There are various benefits of holding your demat account
with us but the biggest advantage is that you shall be ensured of a risk free, prompt and
efficient depository process.
34
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
DIFFERENCE BETWEEN ANGLE DEPOSITORY SERVICES &
OTHER DEPOSITORY SERVICES.
Since our association is slated for a long time, we are in a much better position to
know your requirement regarding your holding and transfer of securities.
No physical instructions are required for your sell obligations. We also offer to our
clients the automated pay in facility for trade done through Angel Broking Ltd / Angel
Capital and Dept Market Ltd. The transaction charges that are being levied by us are the
lowest in the industry as we believe in providing quality services at the most
affordable costs.
You have an option of choosing the products offered by CDSL:-
( A ) Easy facility :-
You can view, download and print the updated holding of your demat account along
with valuation of holding.
( B ) Easiest facility :-
You can, by using this facility, submit your own delivery instructions on the
internet without the intervention of your DP. This is in addition to all the facilities
provided under the 'Easy' facility.
We would like you to know that the state of art technology being arranged for you is
the best in the industry and all this is done so that you have convenience of
accessing information from any desired location.
35
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
MUTUAL FUND:-
The Angel Mutual Fund distribution and advisory division offers you the
opportunity to diversify your investment portfolio. By offering a choice of investment
schemes from all major mutual fund providers we have taken our 100% retail-focused
philosophy a step further. Angel Mutual Fund offers options catering to investors with
varying risk-return profiles. We also help investors to choose the best mutual fund, based
on their investment needs.
EMOTIONS
( A ) SELF DISCIPLINE:-
The greatest cause of loss in trading commodities is lack of self-discipline – lack of
self-discipline to follow your game plan; lack of self-discipline to be patient; lack of
self-discipline to take a loss or profit, lack of discipline to follow money management
concepts. "Luck might play a part in the short-run, but in the end, only those players
who play the game better will triumph. Acting in a disciplined manner is essential for
success. "
( B ) TAKE PROFITS:-
Tremendous amounts of money can and are being made in the commodities
markets. Profits are there for the making, but the real key to trading commodities is
not making money; it is keeping it. It is not basking in the elation of success; it is
taking your profits and looking over your shoulder.
36
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
( C ) BALANCE:-
Trading commodities is a game of psychology. It is a game of balance.
Emotional extremes create an imbalance. In your elation at being successful, you will
make mistakes of greed. In your reluctance to take a loss, you will make mistakes
of fear. The tremendous emotional release one feels after closing out a big losing
position is amazing. Fighting the market, yet knowing it was going to go against us,
but wanting it to go in our direction - pushing it, hoping for it, worrying about it.
After a few days or a few weeks of that, it felt as though the weight of the world was
taken off our shoulders when we finally take the loss.
( D ) PROFIT & LOSS CYCLES:-
Most often, meeting a margin call will only increase your loss. A margin call
means you are wrong in the market and your position should be closed out. Margin calls
are met because people do not want to admit being wrong and take a loss; because they
hope the market will eventually go in their direction. Avoid meeting margin calls.
37
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP-9:- FINDINGS & INTERPRETATION
To study the perception of investors towards commodity futures:-
In this section the data obtained through the questionnaire from the investors in
commodity futures is analyzed.
SECTION :- A
Q-1 :- INVESTMENT RESPONDENTS FROM MALE & FEMALE
Particulars No. of Respondents %
Male 121 80.67
Female 29 19.33
Total 150 100
Male Female0
20
40
60
80
100
120
140
121
29
Q.1
Gender
No.
of r
espo
ndan
ts
Findings
From the above table and chart, it can be seen that 80.67% of the respondents were
male, and 19.33% were female.
Interpretation
It can be concluded that mainly males invest in commodity futures.
38
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q-2: INVESTORS’ RESPONSE FROM FOLLOWIG AGE GROUP:-
Particulars No. of Respondents %
20 to 30 years 75 50.00
30 to 40 years 14 9.33
40 to 50 years 45 30.00
Above 50 years 13 8.67
Total 150 100
Findings
From the above table and chart, it can be seen that 50% of the respondents were
in the age group of 20-30 years, 9.33% were in the age group of 30-40 years, and 30%
were in the age group of 40-50 years and 8.67% in the age group of 50 years and above.
Interpretation
It can be concluded that mainly the young people have invested commodity futures.
Q-3 INVESTERS RESPONES FROM EDUCATION PROFILE:-
39
20-30 30-40 40-50 Above 500
10
20
30
40
50
60
70
80
78
14
45
13
Q. 2
Years
Resp
onda
nts
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Particulars No. of Respondents %Secondary 00 -
Higher Secondary 02 1.33Graduation 69 46.00
Post Graduation 44 29.33Any other 35 23.33
Total 150 100
Findings
From the above table and chart, it can be seen that 46% of the respondents were
in the Graduate group, 29.33% were in the post graduate group, 23.33% were in
the Any other group and 1.33% in the higher secondary group invested in commodity
futures.
Interpretation
It can be concluded that mainly the young graduates have invested commodity futures.
40
Secondary Higher Secondary Graduation Post graduation any other0
10
20
30
40
50
60
70
0 2
69
4435
Q. 3
Education
Resp
onda
nts
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q-4 INVESTERS RESPONES FROM OCCUPATION:-
Occupation No. of Respondents %Government employee 64 42.66
Self employee 9 6.00Commodity futures Investor 48 32.00
Private sector employee 21 14.00Other Businesses 8 5.33
Total 150 100
0
10
20
30
40
50
60
7064
9
48
21
8
Ques 4
occupation
resp
onda
nts
Findings
From the above table and chart, it can be seen that 42.66% of the respondents
were in the Government employee group, 6% were in the Self employee group,
32% were in the Commodity futures Investor group , 14% in the Private sector
employee group invested in commodity futures and 5.33% in the Other Businesses group
invested in commodity futures
Interpretation
It can be concluded that mainly the Government employee group have invested
commodity futures.
Q- 5 INVESTERS RESPONES FROM INCOME PROFILE:-
41
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Income Group No. of Respondents %Below 4 lakh 62 41.33
4-10 lakh 45 30.0010-25 lakh 38 25.33
25 lakh above 5 3.33Total 150 100
Below 4 lacs 4-10 lacs 10-25 lacs Above 25 lacs0
10
20
30
40
50
60
70 62
4538
5
Ques 5
Income
No
of R
espo
ndet
s
FINDINGS
From the above table and chart, it can be seen that 41.33% of the respondents in the
income group of below Rs. 4 lakh, 30% were of the income group of Rs. 4-10 lakh and
25.33% were in the income group of Rs. 10-25 lakh
INTERPRETATION
It can be concluded that most of the people who have invested commodity futures are in
the income group of below Rs. 4 lakh
42
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
SECTION:- B
Q.1 Have you invested in commodity futures?
Particular No. of Respondents %
Yes 150 100
No 00 -
Total 150 100
Yes No0
20406080
100120140160
150
2.5
Que 1
Investment in Commodity Futures
Resp
onde
nts
Findings
From the above table and chart, it can be seen that 100% of the respondents have
invested in commodity futures, and 0% have not invested in commodity futures.
Interpretation
It can be concluded that most of the respondents have invested in commodity
futures.
43
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 2 Have you invested in any other securities.
Yes No0
20
40
60
80
100
120
108
42
Q.2
Investment in other Securities
Resp
onde
nts
Findings
From the above table and chart, it can be seen that 72% of the respondents have invested
in other securities, and28% have in any other security.
Interpretation
It can be concluded that most of respondents have invested in other securities also.
Q. 3 Do you have any other investment? (Excluding commodity futures)
44
Particular No of Respondents %
YES 108 72NO 42 28
Total 150 100
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Particular No. of Respondents (Multiple Choices) %
Shares 57 19.86
Mutual funds 39 13.59
Bonds 29 10.10
Bank Deposits 49 17.70
Real estate 23 08.01
Jewels (Gold) 56 19.51
Insurance 34 11.85
Total 287 100
Shares Mutual Funds
Bonds Bank Deposits
Real Estate Jewels Insurance0
10
20
30
40
50
6057
39
29
49
23
56
34
Q. 3
Other Investments
Resp
onde
nts
Findings
It can be seen that, out of the respondents who have invested in other securities,
19.86% of them have invested in shares, 13.59% Mutual funds, 10.10% in Bonds,
17.70% have invested in bank deposits. 08.01% in real estate, 19.51% have invested
in jewellery and the rest 11.85% have invested in insurance.
Interpretation
It can be concluded that other than commodity futures, most of the respondents have
invested in shares.
Q. 4 how often do you trade in commodity future?
45
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Particulars No. of Respondents %
Everyday 14 9.33
Once a week 77 51.33
Trade when good prices 59 39.33
Total 150 100
Everyday Once a Week When Good Prices0
10
20
30
40
50
60
70
80
14
77
59
Q. 4
Trading of Commodities
Resp
onde
nts
Findings
It can be seen that out of the investors in commodity futures, 9.33% of them trade
everyday, 51.33% of them traded once a week and 39.33% traded only when there is
good price.
Interpretation
It can be concluded that most of the investors trade in commodity futures only
when there traded once a week.
46
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 5 what is your objective when trading in commodity futures?
Particular No. of Respondents %
Less risky investment 28 18.67
Diversification of portfolio 92 61.33
Very good returns 25 16.67
Others 05 3.33
Total 150 100
Less Risky In-vestment
Diversification Very Good Returns Other objective0
102030405060708090
100
28
92
25
5
Q. 5
Trading Objectives
Resp
onde
nts
Findings
It can be seen that out of the investors in commodity futures, 18.67% of them have
invested with the objective a less risky investment, 61.33% of them invested with
the objective of diversifying hid portfolio and 16.67% of them due to the
expectation of very good returns and 3.33% have invested due to other reasons.
Interpretation
It can be concluded that most of the investors in commodity futures, have invested with
the objective of diversifying their portfolio.
47
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q.6 what is the amount you have invested in commodity futures?
Particular No. of Respondents %
2 Lakhs 43 28.67
2-3 Lakhs 66 44.00
3-5 Lakhs 36 24.00
5-10 Lakhs 04 02.67
10 Lakhs more 01 00.66
Total 150 100
2 Lakhs 2-3 Lakhs 3-5 Lakhs 5-10 Lakhs Above 10 Lakhs0
10
20
30
40
50
60
70
43
66
36
4 1
Q. 6
Investment Amount
Resp
onde
nts
Findings
It can be seen that out of the investors, 28.67% of them had invested Rs. 2 lakhs, 44%
of them had invested between Rs. 2-3 lakhs, 24% had invested between Rs. 3-5 lakhs
and 02.67% had invested between Rs. 5-10 lakhs.
Interpretation
It can be concluded that most of the investors had invested between Rs. 2-3 lakhs in
commodity futures.
48
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 7 Which commodities have you traded in the most?
Particular No. of Respondents %
Wheat 70 46.67
Cotton 69 46.00
Coffee 07 04.67
Corn 04 02.66
Total 150 100
wheat cotton coffee corn0
10
20
30
40
50
60
70
70 69
7 4
Q-7
commodities
RESPONDENTS
Findings
It can be seen that out of the investors in commodity futures, 46.67% investor invest in
wheat, 46% investor invest in cotton, 4.67% investors invest in coffee, and 2.66%
investors invest in corn.
Interpretation
It can be concluded that the mostly traded commodity is wheat and coffee.
49
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 8 what percentage of savings have you invested in commodity futures?
Particular No. of Respondents %
0-10% 12 8
10-20% 48 32
20-30% 66 44
30-50% 6 4
50% above 18 12
TOTAL 150 100
0-10% 10-20% 20-30% 30-50% 50% above0
10
20
30
40
50
60
70
12
48
66
6
18
Q-8
Investment from Saving
Resp
onde
nts
Findings
It can be seen that, 44% of the investors have invested between 20-30% of their savings
in commodity futures, 32% of them have invested between 10-20% of their savings,
12% of them have invested above 50% of their savings, 8% of them have invested
between 0-10% of their savings and 4% of them have invested between 30-50% of
their savings.
Interpretation
It can be concluded that most of the investors have invested between 20-30% of their
savings in commodity futures.
50
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
9) How do you come to know about ‘Commodity Futures Trading’?
Particular No. of Respondents %Friends 17 11.33Media 64 42.67
Self- research 56 37.33Other 13 8.67Total 150 100
Friends Media Self- research Other0
10
20
30
40
50
60
70
17
6456
13
Q-9
knowelage of investment
Resp
onde
nts
Findings
It can be seen that, 11.33% of the investors got to know about commodity futures
through their friends/family, 42.67% got to know through media and 37.33% of the
investors got to know through self-research.
Interpretations
It can be concluded that most of the investors got to know about commodity futures
through media.
51
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q.10 which is the risk management technique, which you use mostly?
Particulars No. of Respondents %
Switching 23 15.33
Averaging 70 46.67
Locking 48 32.00
Cut Loss 09 06.00
Total 150 100
Switching Averaging Locking Cut Loss0
10
20
30
40
50
60
70
23
70
48
9
Q. 10
Risk Mgt. Techniques Usage
Resp
onde
nts
Findings
It can be seen that out of the risk management techniques, 32% of the investors use
locking, 15.33% use switching and 6% use cut loss technique & 46.67% averaging
Interpretation
It can be concluded that is the mostly used averaging risk management technique.
52
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 11 what do think about the felicitation fee charged by your company?
Very high High Reasonable Low0
10
20
30
40
50
60
70
80
37
78
25
10
Q. 11
Felicitation Charges
Resp
onde
nts
Findings
It can be seen that, 16.67% of the investors feel that the facility fee charged by their
company is reasonable, 52% of them feel that the facility fee charged by their company
is high and 24.67% of the investors feel that it is very high.
Interpretations
It can be concluded that most of the investors feel that the facility fee charged by their
company is high.
53
Particular No of Respondents %
Very high 37 24.67High 78 52.00
Reasonable 25 16.67Low 10 6.67Total 150 100
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 12 What do you think of the return derived from commodity futures?
Good Reasonable Bad0
1020304050607080
68 71
11
Q. 12
Returns Derived from commodity
Resp
onde
nts
Findings
It can be seen that, 45.33% of the investors feel that they got good returns from
commodity futures trading, 47.33% of them feel that they got reasonable returns
commodity futures, 7.33% of the investors felt they got bad returns from commodity
futures.
Interpretations
It can be concluded that most of the investors got reasonable returns from commodity
futures.
54
Particular No. of Respondents %
Good 68 45.33
Reasonable 71 47.33
Bad 11 7.33
Total 150 100
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q. 13 Do you think risk can be reduced by commodity futures?
Yes No0
20
40
60
80
100
120
140
139
11
Q. 13
Can Risk be reduced by Commodity Futures?
Resp
onde
nts
Findings
It can be seen that 92.67% of the investors feel that risk can be reduced through
commodity futures, and 7.33% of the Investors feel that risk cannot be
reduced through commodity futures.
Interpretation
It can be concluded that most of the investors feel that “risk can be reduced” through
commodity futures trading.
55
Particular No. of Respondents %Yes 139 92.67No 11 7.33
Total 150 100
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Q.14 Do you think commodity future is a good investment opportunity?
Yes No0
20
40
60
80
100
120
140
132
18
Q. 14
Is commodity future is good investment opportunity?
Resp
onde
nts
Findings
From the above table and chart, it can be seen that 88% of the investors feel that
commodity futures is a good investment opportunity and 12% investors feel that
commodity futures is not a good investment opportunity.
Interpretation
It can be concluded that most of the investors feel that commodity futures is a
“good investment opportunity”.
56
Particular No. of Respondents %Yes 132 88No 18 12
Total 150 100
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Analysis of Findings and Interpretation
Calculation of sample size:- Total population: 350000
Assume maximum sample =350 customers
p = 350/350000 =0.001
q = 1- p = 1- 0.001 = 0.999
It is assumed that there is 5% of error and 95% of level of significance,
Z = 0.95/2 = 0.475, by seeing in z- table in reverse we will get 1.96
s = z 2 pq = (1.96) 2 × 0.001 × 0.999
e2 (0.05)2
= 1.54 = 2.
So, we can take our sample between Min. 2 to Max. 350 customers
So, I have taken my sample as that is between 2 to 350.
U can take any figure between 2 to 350........
Chi-Square Analysis:
57
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
A fundamental problem is genetics is determining whether the experimentally
determined data fits the results expected from theory.
Karl Pearson and R.A. Fisher developed the “chi-square” test.
The chi-square test is a “goodness of fit” test: it answers the question of how well do
experimental data fit expectations.
The “Χ” is the Greek letter chi; the “∑” is a sigma; it means to sum the following
terms for all phenotypes. “obs” is the number of individuals of the given phenotype
observed; “exp” is the number of that phenotype expected from the null hypothesis.
Note that you must use the number of individuals, the counts, and NOT proportions,
ratios, or frequencies.
exp
exp)( 22 obs
Critical values for chi-square are found on tables, sorted by degrees of freedom and
probability levels. Be sure to use p = 0.05.
If your calculated chi-square value is greater than the critical value (Tabulated Value)
from the table, you “reject the null hypothesis”.
If your chi-square value is less than the critical value, you “fail to reject” the null
hypothesis (that is, you accept that your genetic theory about the expected ratio is
correct).
A critical factor in using the chi-square test is the “degrees of freedom”, which is
essentially the number of independent random variables involved.( If CV > TV,
Reject H0 & Accept H1, Vice- versa).
58
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Chi-Square Test for Occupation and Investment (Q.5 A and Q. 6 B)
H0: Investment is independent of Occupation.
H1: Investment is dependent of Occupation.
Investment
Occ
upati
on
Particulars Below 2 Lakh
2 to 3 Lakh
3 to 5 Lakh
5 to 10 Lakh
Above 10 Lakh
Total
Government Employee 23 25 15 1 0 64Self Employed 4 4 1 0 0 9
Commodity Future Investor 14 19 13 2 0 48Private sector Employee 2 13 6 0 0 21
Other Businessmen 0 5 1 1 1 8Total 43 66 36 4 1 150
2 = (fo-fe) 2 fedf = (r-1) (c-1)
r = No. of rows
c = No. of columns
Frequency Expected
59
Fe = (ni*nj) 64*43 = 18.35 N 150
2 = (fo-fe) 2 (23-18.35) 2 = 1.18fe 18.35
NO. Frequency Expected(fe) 2
11 18.35 1.1812 28.16 0.35513 15.36 0.00814 1.71 0.29315 0.43 0.42721 2.58 0.78222 3.96 023 2.16 0.62324 0.24 0.2425 0.06 0.0631 13.76 0.00432 21.12 0.21333 11.52 0.1934 1.28 0.40535 0.32 0.3241 6.02 2.68442 9.24 1.5343 5.04 0.18344 0.56 0.5645 0.14 0.1451 2.29 2.29352 3.52 0.62253 1.92 0.44154 0.21 2.90155 0.05 16.803
Total 150 33.257
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Calculated Chi-Sq = 33.258, DF = 16
Tabulated Chi-Sq is = 26.39 (20.05, 16) from Chi-Square table
Interpretation:-
The observed value of Chi-Sq, 33.25, is greater than the tabulated value, 26.39.
Therefore the null hypothesis is rejected as the Investment is independent of Occupation.
This concludes that the investment decision is more dependent on Occupation and this information will help out to company to for market decision.
60
1.645 4.09 443.94
P=.30
Rejection Area
Non- rejection Area
0.5 0.5
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CALCULATION OF HYPOTHESIS:- [QUES: 12]This test is used validly only when there is sample size is large enough such that n*p> 5 and n*q> 5.STEP-1H0:P = 30% of Investors believe good return from commodity future
H1:P > 30% of believe good return from commodity future
STEP-2Assumed if error rate is 5% then α=0.05
STEP-3 0.5-0.05=0.45 Z value is: 1.645 (0.5-0.05=0.45)
STEP-4
In this question the sample size is n=150 and p=0.30
Therefore n*p=150*0.30 which is greater than 5.
P^= sample proportionp= population proportionq= 1-p
P¿= xn
= 68
150 = 0.4533
Z= P−P
√ pq /n
= 4.0978
The Observed Value 4.0978 is greater than tabulated value 1.645. Therefore the null
hypothesis is rejected. Therefore it concludes that > 30% of Investors believe good return
from commodity future.
61
1.645 2.63 443.94
P=0.85
Rejection Area
Non- rejection Area
0.5 0.5
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CALCULATION OF HYPOTHESIS:- [QUES: 9]
This test is used validly only when there is sample size is large enough such that n*p> 5 and n*q> 5.STEP-1
H0:P= 85% investor believe that commodity future can reduce risk
H1:P≧85% investor believe that commodity future can reduce risk
STEP-2Assumed if error rate is 5% then α=0.05
STEP-3 0.5-0.05=0.45 Z value is: 1.645 (0.5-0.05=0.45)
STEP-4In this question the sample size is n=150 and p=0.85Therefore n*p=150*0.85 which is greater than 5.
P^= sample proportionp= population proportionq= 1-p
P¿= xn =
139150 = 0.9266 ≈ 0.93
Z= P−P
√ pq /n
= 2.63
The Observed Value 2.63 is more than tabulated value 1.645. Therefore the null
hypothesis is rejected. Therefore it concludes that > 85% of Investors believe that risk can
be reduced by commodity future.
62
SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
CHAP:-10 RESEARCH FINDING & CONCLUSION
The prime objective of this study is to attempt to prove that commodity futures can be
efficiently used to reduce risks of a person who is directly involved with the trading
of the commodity. Another objective was to prove that it was a sound investment
opportunity.
In order to prove both the objectives, a few sub objectives were earmarked and analyzed.
The first being the trading system of commodity futures. The trading system included the
exchange where the trade takes place the clearinghouse which ensures that the money
is transferred to the right person at the right time. The trading system also includes
trading and intermediary participants, who ensure the correct price discovery. Thus the
trading system is one of the factors which reduce the risk in commodity futures.
Commodity futures trading included the intermediary and trading participants likes
brokers who make use of the various technical analysis tools in order to make
predictions of the price movement’s they also take into consideration the fundamental
analysis. Thus with the help of the various analysis tools, efficient price predictions can
be made, where the investors in commodity futures can benefit from the price
movements. There was also an objective to analyze the growth of commodity future.
From the analysis, it can be Concluded that, commodity futures trading is experiencing
tremendous growth. This can be emphasized by the fact that there has been an increasing
trend in the volume traded in most of the commodities. Thus, commodity futures are a
growing market. To find out the investors perception towards commodity futures,
questionnaire survey was conducted, where in various parameters were taken into
consideration. From the questionnaire, it could be concluded that most of the
respondents felt that risk could be reduced through commodity futures and
that it was a sound investment opportunity.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
SUGGESTIONS & RECOMMENDATIONS
“Risk control is an essential part of trading successfully. Effective risk management
requires not only the careful monitoring of risk exposure, but a strategy to
minimize losses as well. Understanding how to control risk exposure allows the trader,
beginner or veteran, to continue trading even when the inevitable losses occur.
While every trade involves a degree of risk, some general principles of risk management,
if applied, reduce the potential for loss. A few of the generally accepted market axioms
for controlling risk are noted below and are applicable to anyone who has ever
traded or ever considered trading”
Trade with the trend:-
You will be less likely to incur a loss if you are following the market trend. The direction
of the market does not matter as long as you are positioned for the trend that occurs. If
you are not well positioned, then systematically reduce your risk exposure.
Diversify:-
Portfolio risk is reduced through diversification. Don’t bet everything on one trade.
Diversify your risk exposure by trading no more than 1% to 5% of your capital on any
one position. (Contracts on different maturities of the same commodity count as
one position.) To be effective diversification must involve commodities that are
not highly correlated (that is, that do not move in the same direction at the same time).
High positive correlation reduces the benefits of diversification. Predetermined
stop orders limit your risk exposure and will cut your losses in fast moving markets.
Adopt a rigid stop-loss rule (for example, get out of a trade quickly if it loses 5-7%)
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
Don't overtrade:-
Reduce your risk exposure by cutting down on the number of trades you make and
keeping your bets small. Be selective about the risks you take. Restrict your trades to the
ones that are the most attractive. This forces you to do your homework and reduces
impulsive and emotional trades. Because there will be fewer trades, you will have to be
much more patient.
Risk management basically involves four essential steps:-
Fully understanding the risks of the trade.
Eliminating unnecessary risks where possible.
Being selective about which risks to take.
Acting quickly to reduce risk exposure if the market moves against you
Common mistakes made by traders:-
(A) Lack of a Game Plan:-
One of the most important moves a futures trader can make is to develop a game plan
consisting of basic guidelines.
(B) Meeting Margin Calls:-
Most often, meeting a margin call will only increase your loss. A margin call means you
are wrong in the market and your position should be closed out. Margin calls are met
because people do not want to admit being wrong and take a loss; because they hope the
market will eventually go in their direction. Avoid meeting margin calls.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
( C ) Lack of Money Management:-
Good money management means you know your profit objective and the odds of
being right or wrong, and control your risk with stops. You are better off with a trade
where you might lose 1000 if you are wrong, or make 1000 if you are right, that
would work six times out of ten, than to take a trade where you would make 1500 if
you are right and lose only 500 if you are wrong, but works only one time out of
three.
( D ) Increasing Your Commitment With Success:-
One of the most dangerous mistakes you can make in trading commodities is to
increase your exposure, as you become more successful. Just by being successful you
will risk more per trade because you have more money. But, because you have
more money (and confidence) when successful, you are also likely to take larger
percentage risks. Not surprisingly, this ruins more futures traders than a series of small
losses. You can overcome this mistake by not allowing your percentage commitment to
increase as you realize profits and by maintaining your stop/loss discipline.
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
ANNEXURE
ANGEL BROKING LTD
KNOW YOUR CLIENT (KYC)
1. ARE YOU AWARE ABOUT THE FOLLOWING SERVICES
OF ANGEL BROKING LTD?
SR.
NO
PRODUCT NOT AT
ALL
PARTIAL
FULL
1. NSE, BSE, FO
2. DEMAT ACCOUNT
3. MCX, NCDX
4. PMS
5. INSURANCE
6. MUTUAL FANDS
PLEASE TICK ONE OF THE FOLLOWING STATEMENTS:
[ ] I am totally satisfied & don’t want to switch.
[ ] I am satisfied but expect more improvements in service.
[ ] I am totally dissatisfied and switch over.
DO YOU HAVE ANY COMPAIN OR SUGGESTION FOR US?
___________________________________________________________________
________________________________________________________________________
________________________________________________________________________
_____________________.
CLINT ID:- ___________________
CLINT NAME:-________________
CLINT SIGNATURE:-___________
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
QUESTIONNAIRE
PART – A
(PLEASE TICK WHICHEVER IS APPLICABLE)
1) Name:- __________________________________
2) Sex:
Male:-
Female:-
3) Age:
20-30 Years:- 30-40 years:-
40-50 Years:- Above 50 years:-
4) Education:
secondary:-
Higher secondary:-
Graduation:-
Post-graduation:-
Any other:-
5) Occupation:
Government employee:-
Self-employee:-
Commodity futures investor:-
Private sector employee:-
Others Businessman:-
6) Income:
Below 400000:-
4,00,001 – 10,00,000:-
10,00,001 – 25,00,000:-
Above 25,00,000:
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
PART – B
1) Have you invested in commodity futures?
Yes:-
No:-
2) Have you invested in any other security?
Yes:-
No:-
3) Which are the investments you have made (excluding commodity futures)?
Shares:-
Bonds:
Mutual funds:-
Bank deposits:-
Real estate:-
Jewellery:-
Others:
4) What is your experience in your previous investment (excluding commodity
futures)?
Good:-
Reasonable:-
Bad:-
5) How often do you trade in commodity futures?
Every day:-
Once a week:-
Trade only when there is a good price:-
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
6) What is your objective when trading in commodity
futures?
Less risky investment:-
Diversification of portfolio:-
Very good returns:-
Others:-
7) What is the amount you have invested in commodity
futures?
2,00,000:-
2,00,000-3,00,000:-
3,00,000-5,00,000:-
5,00,000-10,00,000:-
Above 10,00,000:-
8) Which commodities have you traded in the most?
Wheat:-
cotton:-
Coffee:-
Corn:-
9) What percentage of savings have you invested in
commodity futures?
0-10% :-
10-20%:-
20-30%:-
30-50%:-
50% and above:-
10) How did you get to know about commodity futures trading?
Friends/family:-
Self-research:-
Media:-
Others:-
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
11) Which is the risk management technique, which you use mostly?
Switching:-
Averaging:-
Locking:-
Cut loss:-
12) What do you think about the felicitation fee charged by your company?
Very high:-
High:-
Reasonable:-
Low:-
13) What do you think of the return derived from commodity futures?
Good:-
Reasonable:-
Bad:-
14) Do you think risk can be reduced by commodity futures?
Yes:-
No:-
15) Do you think commodity future is a good investment opportunity?
Yes:-
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SURVEY ON “INVESTORS' PERCEPTION OF COMMODITY FUTURES”
BIBLIOGRAPHY
BOOKS:-
The Indian Financial System - Vasanth Desai
Financial Markets and Services – Gordon & Natarajan
Business Statistics for Contemporary Decision Making (4th Edition) – Ken Black
WEBSITES:-
www.rbi.org
www.sebi.com
www.barchart.com
www.angeltraed.com
www.angelcommodity.com
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