TABLE OF CONTENT

CHAPTER

TOPIC

PAGE NO.

Chapter 1

Introduction of Sharekhan Limited 1.1 About sharekhan limited 1.2 Sharekhan Limiteds Management Team 1.3 Products and Services of Sharekhan Limited 1.4 Types of account in Sharekhan Limited 1.5 How to open an account with Sharekhan Limited? 1.6 Research section in Sharekhan Limited 1. 7 Awards and Achievements 11 15 15 16 19 23 24

Chapter 2

Investment in derivative 2.1 Introduction 2.2 Equity future and option 2.3 Emergence of Derivatives 2.4 History of Derivatives 2.5 Global Derivative Markets 26 27 28 29 30

2.6 Derivatives Market in India 2.7 Types of Derivative Instruments 2.8 Derivative Market at NSE 2.9 Clearing and Settlements Chapter 3 Investment in commodity 3.1 Introduction of Commodity 3.2 Index of commodity 3.3 Why Structured Commodity Market ? 3.4 Characterstics Of Future Trading 3.5 Economic benefit of future trading 3.6 Commodity are suitable for future trading Chapter 4 Research Methodology 4.1 Research Design 4.2 Data Source 4.3 Sampling Design 4.4 Statistical Tools Chapter 5 Chapter 6 Chapter 7 Objective Analysis & Interpretation Annexure Conclusion & Finding Limitation the study Biblography Questionaire

31 32 33 33

37 39 40 43 43 44

46 46 47 47 49 51

74 75 76 77

Chapter 1

INTRODUCTION
ABOUT SHAREKHAN LIMITED
Sharekhan Ltd. is one of the leading retail stock broking house of SSKI Group which is running successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI Group, which has over eight decades of experience in the stock broking business. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE, NSE, Derivatives, depository services, online trading, investment advice etc. The firms online trading and investment site - www.sharekhan.com - was launched on Feb 8, 2000. The site gives access to superior content and transaction facility to retail customers across the country. Known for its jargon-free, investor friendly language and high quality research, the site has a registered base of over one lakh customers. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks. On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable application that emulates the broker terminals along with host of other information relevant to the Day Traders. This was for the first time that a net-based trading station of this caliber was offered to the traders. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. Sharekhans ground network includes over 640 centers in 280 cities in India which provide a host of trading related services. Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle are the other investors.

With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market in each of these segments. SSKIs institutional broking arm accounts for 7% of the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country. It has 60 institutional clients spread over India, Far East, UK and US. Foreign Institutional Investors generate about 65% of the organizations revenue, with a daily turnover of over US$ 2 million. The Corporate Finance section has a list of very prestigious clients and has many firsts to its credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav, Essar, Hutchison, Planetasia, and Shoppers Stop.

PROFILE OF THE COMPANY

Name of the company: Year of Establishment: Headquarter : Sharekhan ltd. 1925 ShareKhan SSKI A-206 Phoenix House Phoenix Mills Compound Lower Parel Mumbai - Maharashtra, INDIA- 400013

Nature of Business

Service Provider

Services

Depository Services, Online Services and Technical Research.

Number of Employees :

Over 3500

Revenue

Data Not Available

Website

www.sharekhan.com

Slogan

Your Guide to The Financial Jungle.

Vision
To be the best retail brokering Brand in the retail business of stock market.

Mission
To educate and empower the individual investor to make better investment decisions through quality advice and superior service.

Sharekhan is infact Among the top 3 branded retail service providers No. 1 player in online business Largest network of branded broking outlets in the country serving more than 7,00,000 clients.

REASON TO CHOOSE SHAREKHAN LIMITED

Experience

SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money broker's poll held recently, SSKI won the 'India's Best Broking House for 2004' award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institutional-level research and broking services to individual investors. Technology With its online trading account one can buy and sell shares in an instant from any PC with an internet connection. One can get access to its powerful online trading tools that will help him take complete control over his investment in shares. Accessibility Sharekhan provides ADVICE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible through its centers across the country over the internet (through the website www.sharekhan.com) as well as over the Voice Tool. Knowledge In a business where the right information at the right time can translate into direct profits, one can get access to a wide range of information on Sharekhan limiteds content-rich portal. One can also get a useful set of knowledge-based tools that will empower him to take informed decisions. Convenience One can call its Dial-N-Trade number to get investment advice and execute his transactions. Sharekhan ltd. have a dedicated call-centre to provide this service via a Toll Free Number 1800-22-7500 & 1800-22-7050 from anywhere in India. Customer Service Sharekhan limiteds customer service team will assist one for any help that one may requi re relating to transactions, billing, demat and other queries. Its customer service can be contacted via a toll-free number, email or live chat on www.sharekhan.com.

Investment Advice Sharekhan has dedicated research teams of more than 30 people for fundamental and technical researches. Its analysts constantly track the pulse of the market and provide timely investment advice to its clients in the form of daily research emails, online chat, printed reports and SMS on their mobile phone.

SHAREKHAN LIMITEDS MANAGEMENT TEAM

Dinesh Murikya Tarun Shah Shankar Vailaya :

Owner of the company CEO of the company Director (Operations) Director (Products & Technology) Head of Research

: : : : :

Jaideep Arora Pathik Gandotra Rishi Kohli Nikhil Vora

Vice President of Equity Derivatives Vice President of Research

PRODUCTS AND SERVICES OF SHAREKHAN LIMITED

The different types of products and services offered by Sharekhan Ltd. are as follows: Equity and derivatives trading Depository services Online services Commodities trading Dial-n-trade

Portfolio management Share shops Fundamental research Technical research

TYPES OF ACCOUNT IN SHAREKHAN LIMITED

Sharekhan offers two types of trading account for its clints Classic Account (which include a feature known as Fast Trade Advanced Classic Account for the online users) and Speed Trade Account

CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website www.sharekhan.com and is suitable for the retail investor who is risk-averse and hence prefers to invest in stocks or who does not trade too frequently. This account allow investors to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, Demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer.

This account comes with the following features:

a. Online trading account for investing in Equities and Derivatives b. Free trading through Phone (Dial-n-Trade) I. Two dedicated numbers(1800-22-7500 and 39707500) for placing the orders using cell phones or landline phones II. Automatic funds transfer with phone banking facilities (for Citibank and HDFC bank customers)

III. Simple and Secure Interactive Voice Response based system for authentication IV. get the trusted, professional advice of Sharekhan limiteds Tele Brokers V. After hours order placement facility between 8.00 am and 9.30 am c. Integration of: Online Trading +Saving Bank + Demat Account. d. Instant cash transfer facility against purchase & sale of shares. e. IPO investments. f. Instant order and trade confirmations by e-mail. g. Single screen interface for cash and derivatives.

SPEED TRADE ACCOUNT

This is an internet-based software application, which enables one to buy and sell in an instant. It is ideal for active traders and jobbers who transact frequently during days session to capitalize on intra-day price movement. This account comes with the following features: a. Instant order Execution and Confirmation. b. Single screen trading terminal for NSE Cash, NSE F&O & BSE. c. Technical Studies. d. Multiple Charting. e. Real-time streaming quotes, tic-by-tic charts. f. Market summary (Cost traded scrip, highest value etc.) g. Hot keys similar to brokers terminal. h. Alerts and reminders. i. Back-up facility to place trades on Direct Phone lines. j. Live market debts.

CHARGE STRUCTURE
Fee structure for General Individual: Charge Account Opening Classic Account Rs. 750/= Intra-day 0.10 % Brokerage Delivery - 0.50 % Depository Charges: Account Opening Charges Annual Maintenance Charges Rs. NIL Rs. NIL first year Rs. 300/= p.a. from second calendar year onward Delivery - 0.50% Speed Trade Account Rs. 1000/=

Intra-day - 0.10%

HOW TO OPEN AN ACCOUNT WITH SHARE KHAN LIMITED?

For online trading with Sharekhan Ltd., investor has to open an account. Following are the ways to open an account with Sharekhan Ltd.:

One need to call them at phone number provided below and asks that he want to open an account with them. a. One can call on the Toll Free Number: 1-800-22-7500 to speak to a Customer Service executive

b. Or If one stays in Mumbai, he can call on 022-66621111 One can visit any one of Sharekhan Limiteds nearest branches. Sharekhan has a huge network all over India (640 centers in 280 cities). One can also log on to http://sharekhan.com/Locateus.aspx link to find out the nearest branch.

One can send them an email at info@sharekhan.com to know about their products and services.

One can also visit the site www.sharekhan.com and click on the option Open an Account to fill a small query form which will ask the individual to give details regarding his name, city he lives in, his email address, phone number, pin code of the city, his nearest Sharekhan Ltd. shop and his preferences regarding the type of account he wants.

These information are compiled in the headquarter of the company that is in Mumbai from where it is distributed through out the countrys branches in the form of leads on the basis of cities and nearest share shops. After that the executives of the respective branches contact the prospective clients over phone or through email and give them information regarding the various types of accounts and the documents they need to open an account and then fix appointment with the prospective clients to give them demonstration and making them undergo the formalities to open the account. After that the forms that has collected from the clients, is scrutinized in the branch and then it is sent to Mumbai for further processing where after a few days the clients account are generated and activated. After the accounts are activated, a Welcome Kit is dispatched from Mumbai to the clients address mentioned in the documents provided by them. As soon as the clients receive the Welcome Kit, which contains the clients Trading ID and Trading Password, they can start trading and investing in shares.

Generally the process of opening an account follows the following steps:

LEAD MANAGEMENT SYSTEM (LMS) / REFERENCES

CONTACT THE PERSON OVER PHONE OR THROUGH EMAIL

FIXING AN APPOINTMENT WITH THE PERSON

GIVING DEMONSTRATION

YES

NO

DOCUMENTATION

FILLING UP THE FORM

SUBMISSION OF THE FORM

LOGIN OF THE FORM

SENDING ACCOUNT OPENING KIT TO THE CLIENT

TRADING

Apart from two passport size photographs, one needs to provide with the following documents in order to open an account with Sharekhan Limited.: Photocopy of the clients PAN Card which should be duly attached

Photo copy of any of the following documents duly attached which will serve as correspondence address proof:

a. Passport (valid) b. Voters ID Card c. Ration Card d. Driving License (valid) e. Electricity Bill (should be latest and should be in the name of the client) f. Telephone Bill (should be latest and should be in the name of the client) g. Flat Maintenance Bill (should be latest and should be in the name of the client) h. Insurance Policy (should be latest and should be in the name of the client) i. Lease or Rent Agreement. j. Saving Bank Statement** (should be latest)

Two cheques drawn in favour of Sharkhan Limited, one for the Account Opening Fees and the other for the Margin Money (the minimum margin money is Rs. 5000).

** A cancelled cheque should be given by the client if he provides Saving Bank Statement as a proof for correspondence address.

NOTE: Only Saving Bank Account cheques are accepted for the purpose of Opening an account.

RESEARCH SECTION IN SHAREKHAN LIMITED

Sharekhan Limited has its own in-house Research Organisation which is known as Valueline. It comprises a team of experts who constantly keep an eye on the share market and do research on the various aspects of the share market. Generally the research is based on the Fundamentals and Technical analysis of different companies and also taking into account various factors relating to the economy. Sharekhan Limiteds research on the volatile market has been found accurate most of the time. Sharekhan's trading calls in the month of November 2007 has given 89% strike rate. Out of 37 trading calls given by Sharekhan in the month of November 2007, 33 hit the profit target. These exclusive trading picks come only to Sharekhan Online Trading Customer and are based on in-depth technical analysis. As a customer of Sharekhan Limited, one receives daily 5-6 Research Reports on their emails which they can use as tips for investing in the market. These reports are named as Pre-Market Report, Eagle Eye, High Noon, Investors Eye, Daring Derivatives and Post-Market Report. Apart from these, Sharekhan Limited issues a monthly subscription by the name of Valueline which is easily available in the market.

AWARDS AND ACHIEVEMENTS

SSKI has been voted as the Top Domestic Brokerage House in the research category, twice by Euromoney Survey and four times by Asiamoney Survey.

Sharekhan Limited won the CNBC AWARD for the year 2004.

POLL RESULTS: BROKER PREFERENCE

5paise Sharekhan Motilal oswal ICICI Direct HDFC Indiabulls Kotak Others 119 13.45% 194 21.92% 38 46 59 4.29% 5.20% 6.67% 192 21.69% 121 13.67% 116 13.11%

Chapter 2

INVESTMENT IN DERIVATIVES

INTRODUCTION OF DERIVATIES:
Derivatives are financial contracts whose value/price is depends on the behavior of price of one or more basic underling assets. These contracts are legally binding agreement, made on the trading screen of stock exchange, buy or sell an asset in future. The assets can be share, index, interest rate, bond, rupee- dollar exchange rate, sugar, crude oil, soybean, cotton, coffee etc.

EQUITY FUTURE AND OPTION:

Future:-

An agreement between two parties to buy or sell an asset at a certain time in the Future at a certain price. Stock futures on certain specified securities and internet rate futures are available for trading at NSE (NATIONAL STOCK EXCHANGE).All the futures contracts are settled in cash. Options:-

An Options is a contract which gives the right, but not but or sell the underlying at a stated price, which a buyer of an option pays the premium and Options are of two types calls and put. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Calls also known as bulls. Puts give the buyer the right, but not obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Puts also known as bears.

EMERGENCE OF DERIVATIVES
Derivative products initially emerged as hedging devices against fluctuations in commodity prices, and commodity-linked derivatives remained the sole form of such products for almost three hundred years.

Financial derivatives came into spotlight in the post-1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two-thirds of total transactions in derivative products. In recent years, the market for financial derivatives has grown tremendously in terms of variety of instruments available, their complexity and also turnover. In the class of equity derivatives the world over, futures and options on stock indices have gained more popularity than on individual stocks, especially among institutional investors, who are major users of index-linked derivatives. Even small investors find these useful due to high correlation of the popular indexes with various portfolios and ease of use. The lower costs associated with index derivatives vis avis derivative products based on individual securities is another reason for their growing use.

HISTORY OF DERIVATIVES
Early forward contracts in the US addressed merchants concerns about ensuring that there were buyers and sellers for commodities. However credit risk remained a serious problem. To deal with this problem, a group of Chicago businessmen formed the Chicago Board of Trade (CBOT) in 1848. The primary intention of the CBOT was to provide a centralized location known in advance for buyers and sellers to negotiate forward contracts. In 1865, the CBOT went one step further and listed the first exchange traded derivatives contract in the US, these contracts were called futures contracts. In 1919, Chicago Butter and Egg Board, a spin -off of CBOT, was reorganized to allow futures trading. Its name was changed to Chicago Mercantile Exchange (CME). The CBOT and the CME remain the two largest organized futures ex changes, indeed the two largest financial exchanges of any kind in the world today. The first stock index futures contract was traded at Kansas City Board of Trade. Currently the most popular stock index futures contract in the world is based on S&P 500 index, traded on Chicago Mercantile Exchange. During the mid eighties, financial futures became the most active derivative instruments generating volumes many times more than the commodity futures. Index futures, futures on T-bills and Euro-Dollar futures are the three most popular futures contracts traded today. Other popular international exchanges that trade derivatives are LIFFE in England, DTB in Germany, SGX in Singapore, TIFFE in Japan, MATIF in France, Eurex etc.

GLOBAL DERIVATIVE MARKETS

The derivatives markets have grown manifold in the last two decades.. According to the Bank for International Settlements (BIS), the approximate size of global derivatives market was US$ 109.5 trillion as at end December 2000. The total estimated notional amount of outstanding overthecounter (OTC) contracts stood at US$ 95.2 trillion as at endDecember 2000, an increase of 7.9% over endDecember 1999. Growth in OTC derivatives market is mainly attributable to the continued rapid expansion of interest rate contracts, which reflected growing corporate bond markets and increased interest rate uncertainty at the end of 2000. The amount outstanding in organized exchange markets increased by 5.8% from US$ 13.5 trillion as at end December 1999 to US$ 14.3 trillion as at endDecember 2000. The turnover data are available only for exchangetraded derivatives contracts. The turnover in derivative contracts traded on exchanges has increased by 9.8% during 2000 to US$ 384 trillion as compared to US$ 350 trillion in 1999(Table 1.2). While interest rate futures and options accounted for nearly 90% of total turnover during 2000, the popularity of stock market index futures and options grew modestly during the year. According to BIS, the turnover in exchangetraded derivative markets rose by a record amount in the first quarter of 2001, while there was some moderation in the OTC volumes.

DERIVATIVE MARKET IN INDIA

The first step towards introduction of derivatives trading in India was the promulgation of the Securities Laws (Amendment) Ordinance, 1995, which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives.

SEBI set up a 24member committee under the Chairmanship of Dr.L.C.Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 prescribing necessary preconditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof.J.R.Varma, to recommend measures for risk containment in derivatives market in India. The report, which was submitted in October 1998, worked out the operational details of margining system, methodology for charging initial margins, broker net worth, deposit requirement and real time monitoring requirements.

The SCRA was amended in December 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading. The act also made it clear that derivatives shall be legal and valid only if such contracts are traded on a recognized stock exchange, thus precluding OTC derivatives. The government also rescinded in March 2000, the threedecade old notification, which prohibited forward trading in securities.

Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2000. SEBI permitted the derivative segments of two stock exchanges, NSE and BSE, and their clearing house/corporation to commence trading and settlement in approved derivatives contracts. To begin with, SEBI approved trading in index futures contracts based on S&P CNX Nifty and BSE30 (Sensex) index. This was followed by approval for trading in options based on these two indexes and options on individual securities. The trading in index options commenced in June 2001 and the trading in options on individual securities commenced in July 2001. Futures contracts on individual stocks were launched in November 2001. Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and regulations of the respective exchanges and their clearing house/corporation duly approved by SEBI and notified in the official gazette. The derivatives trading on the exchange commenced with S&P CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on S&P CNX Nifty Index. Currently, the futures contracts have a

maximum of 3-month expiration cycles. Three contracts are available for trading, with 1 month, 2 months and 3 months expiry. A new contract is introduced on the next trading day following the expiry of the near month contract.

TYPES OF DERIVATIVE INSTRUMENTS

Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts. Options: Options are of two types - calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of up to one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of up to three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average of a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are: a. Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. b.Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions

market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an option to pay fixed and receive floating.

DERIVATIVE MARKET AT NSE

The derivatives trading on the exchange commenced with S&P CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on S&P CNX Nifty Index. Currently, the futures contracts have a maximum of 3-month expiration cycles. Three contracts are available for trading, with 1 month, 2 months and 3 months expiry. A new contract is introduced on the next trading day following the expiry of the near month contract.

CLEARING AND SETTLEMENTS

NSCCL undertakes clearing and settlement of all deals executed on the NSEs F&O segment. It acts as legal counterparty to all deals on the F&O segment and guarantees settlement. Clearing: The first step in clearing process is working out open positions or obligations of members. A CMs open position is arrived at by aggregating the open position of all the TMs and all custodial participants clearing through him, in the contracts in which they have traded. A TMs open position is arrived at as the summation of his proprietary open position and clients open positions, in the contracts in which they have traded. TMs are required to identify the orders, whether proprietary (if they are their own trades) or client (if entered on behalf of clients). Proprietary positions are calculated on net basis (buy-sell) for each contract. Clients positions are arrived at by summing together net (buy-sell) positions of each individual client for each contract. A TMs open position is the sum of proprietary open position, client open long position and client open short position.

Settlement: All futures and options contracts are cash settled, i.e. through exchange of cash. The underlying for index futures/options of the Nifty index cannot be delivered. These contracts, therefore, have to be settled in cash. Futures and options on individual securities can be delivered as in the spot market. However, it has been

currently mandated that stock options and futures would also be cash settled. The settlement amount for a CM is netted across all their TMs/clients in respect of MTM, premium and final exercise settlement. For the purpose of settlement, all CMs are required to open a separate bank account with NSCCL designated clearing banks for F&O segment.

Chapter 3

INVESTMENT IN COMMODITY

INTRODUCTION

Commodities Market In India

Organized futures market evolved in India by the setting up of "Bombay Cotton Trade Association Ltd." in 1875. In 1893, following widespread discontent amongst leading cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association, a separate association by the name "Bombay Cotton Exchange Ltd." was constituted. Futures trading in oilseeds was organized in India for the first time with the setting up of Gujarati Vyapari Mandali in 1900, which carried on futures trading in groundnut , castor seed and cotton. Before the Second World War broke out in 1939 several futures markets in oilseeds were functioning in Gujarat and Punjab. There were booming activities in this market and at one time as many as 110 exchanges were conducting forward trade in various commodities in the country. The securities market was a poor cousin of this market as there were not many papers to be traded at that time. The era of widespread shortages in many essential commodities resulting in inflationary pressures and the tilt towards socialist policy, in which the role of market forces for resource allocation got diminished, saw the decline of this market since the mid-1960s. This coupled with the regulatory constraints in 1960s, resulted in virtual dismantling of the commodities future markets. It is only in the last decade that commodity future exchanges have been actively encouraged. However, the markets have been thin with poor liquidity and have not grown to any significant level. A three-pronged approach has been adopted to revive and revitalize the market. Firstly, on policy front many legal and administrative hurdles in the functioning of the market have been removed. Forward trading was permitted in cotton and jute goods in 1998, followed by some oilseeds and their derivatives, such as groundnut, mustard seed, sesame, cottonseed etc. in 1999. A statement in the first ever National Agriculture Policy, issued in July, 2000 by the government that futures trading will be encouraged in increasing number of agricultural commodities was indicative of welcome change in the government policy towards forward trading.

Secondly, strengthening of infrastructure and institutional capabilities of the regulator and the existing exchanges received priority. Thirdly, as the existing exchanges are slow to adopt reforms due to legacy or lack of resources, new promoters with resources and professional approach were being attracted with a clear

mandate to set up demutualized, technology driven exchanges with nationwide reach and adopting best international practices. The year 2003 marked the real turning point in the policy framework for commodity market when the government issued notifications for withdrawing all prohibitions and opening up forward trading in all the commodities. This period also witnessed other reforms, such as, amendments to the Essential Commodities Act, Securities (Contract) Rules, which have reduced bottlenecks in the development and growth of commodity markets. Of the country's total GDP, commodities related (and dependent) industries constitute about roughly 50-60 %, which itself cannot be ignored. Most of the existing Indian commodity exchanges are single commodity platforms; are regional in nature, run mainly by entities which trade on them resulting in substantial conflict of interests, opaque in their functioning and have not used technology to scale up their operations and reach to bring down their costs. But with the strong emergence of: National Multi-commodity Exchange Ltd., Ahmedabad (NMCE), Multi Commodity Exchange Ltd., Mumbai (MCX), National Commodities and Derivatives Exchange, Mumbai (NCDEX), and National Board of Trade, Indore (NBOT), all these shortcomings will be addressed rapidly. These exchanges are expected to be role model to other exchanges and are likely to compete for trade not only among themselves but also with the existing exchanges.

Indexes of commodities

MCX:

MCX (MULTI COMMODITY EXCHANGE OF INDIA LTD) is a state-of-the-art electronic commodity futures exchange.MCX is an independent commodity exchange based in India. It was established in 2003 and

is based in Mumbai. The turnover of the exchange for the period Apr-Dec 2008 was INR 32 Trillion.MCX offers futures trading in Agricultural Commodities, Bullion, Ferrous & Non-ferrous metals, Pulses, Oils & Oilseeds, Energy, Plantations, Spices and other soft commodities. MCX has also setup in joint venture the National Spot Exchange a purely agricultural commodity exchange and National Bulk Handling Corporation (NBHC) which provides bulk storage and handling of agricultural products.

NCDEX:

National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally managed online multi commodity exchange promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). Punjab National Bank (PNB), CRISIL Limited (formerly the Credit Rating Information Services of India Limited), Indian Farmers Fertiliser Cooperative Limited (IFFCO) and Canara Bank by subscribing to the equity shares have joined the initial promoters as shareholders of the Exchange. NCDEX is the only commodity exchange in the country promoted by national level institutions. This unique parentage enables it to offer a bouquet of benefits, which are currently in short supply in the commodity markets. The institutional promoters of NCDEX are prominent players in their respective fields and bring with them institutional building experience, trust, nationwide reach, technology and risk management skills. NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It has commenced its operations on December 15, 2003. NCDEX is a nation-level, technology driven de-mutualized on-line commodity exchange with an independent Board of Directors and professionals not having any vested interest in commodity markets. It is committed to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency. NCDEX is regulated by Forward Market Commission in respect of futures trading in commodities. Besides, NCDEX is subjected to various laws of the land like the Companies Act, Stamp Act, Contracts Act, Forward Commission (Regulation) Act and various other legislations, which impinge on its working. NCDEX is

located in Mumbai and offers facilities to its members in more than 390 centers throughout India. The reach will gradually be expanded to more centers. NCDEX currently facilitates trading of thirty six commodities - Cashew, Castor Seed, Chana, Chilli, Coffee, Cotton, Cotton Seed Oilcake, Crude Palm Oil, Expeller Mustard Oil, Gold, Guar gum, Guar Seeds, Gur, Jeera, Jute sacking bags, Mild Steel Ingot, Mulberry Green Cocoons, Pepper, Rapeseed - Mustard Seed ,Raw Jute, RBD Palmolein, Refined Soy Oil, Rice, Rubber, Sesame Seeds, Silk, Silver, Soy Bean, Sugar, Tur, Turmeric, Urad (Black Matpe), Wheat, Yellow Peas, Yellow Red Maize & Yellow Soybean Meal. At subsequent phases trading in more commodities would be facilitated.

WHY STRUCTURED COMMODITY MARKET? Today the business is not limited to our area only. Where the production is less but, demand is comparatively high prices of the product will go up. On the contrary where the production is high but demand is comparatively low the prices will go down. If sellers and buyers come together at a place then it will create a market. Here against one seller there will be more then one buyer. In this market buyers will come across the country for transactions. In this market not only producer and seller are included but arbitrageur, speculator, and hedger can tread. In this way the total area of market will become broad. In our country agricultural products form 25% of GDP. Total turnover of commodity of market is nearly Rs.1, 10,000 corer. In which 60,000 corer comes from agriculture and left is coming from coal, crude, etc Today in our country most of the trade is done in unorganized market. In the market current and future contracts are done. Promissory contracts have been started science 1875. But due to some restriction it was not properly worked. Presently nearly in 122 commodities tread is being done

Transaction in the organized market:

Organized markets have structured forms of transactions. The commodity exchanges are regulated as per rules and regulations define in The Forward Contracts (Regulation) Act, 1952 for regulating forward\future

contracts. In December 2003, the National Commodity and Derivative Exchange Ltd (NCDEX) launched futures trading in nine major commodities.

MCX To begin with contacts in gold, silver, cotton, soyabean, soya oil, mustered seed, rapeseed oil, crude palm oil and RBD Palmolive are being offered. Now more then 40 commodity items are included. Day by day number of commodity items is incising. The various commodities that tread on the NCDEX and look at some commodity specific issues. In this commodity market classified as agriculture products, precious metal, other metal and energy which we discuss above.

COMMODITIES

CHARACTERISTICS OF FUTURES TRADING

A "Futures Contract" is a highly standardized contract with certain distinct features. Some of the important features are as under:

a. Futures trading is necessarily organized under the auspices of a market association so that such trading is confined to or conducted through members of the association in accordance with the procedure laid down in the Rules & Bye-laws of the association. b. It is invariably entered into for a standard variety known as the "basis variety" with permission to deliver other identified varieties known as "tender able varieties". c. The units of price quotation and trading are fixed in these contracts, parties to the contracts not being capable of altering these units. d. The delivery periods are specified. e. The seller in a futures market has the choice to decide whether to deliver goods against outstanding sale contracts. In case he decides to deliver goods, he can do so not only at the location of the Association through which trading is organized but also at a number of other pre-specified delivery centers. f. In futures market actual delivery of goods takes place only in a very few cases. Transactions are mostly squared up before the due date of the contract and contracts are settled by payment of differences without any physical delivery of goods taking place.

Economic Benefits of the Futures Trading:Futures contracts perform two important functions of price discovery and price risk management with reference to the given commodity. It is useful to all segments of economy. It is useful to producer because he can get an idea of the price likely to prevail at a future point of time and therefore can decide between various competing commodities, the best that suits him. It enables the consumer get an idea of the price at which the commodity would be available at a future point of time. He can do proper costing and also cover his purchases by making forward contracts. The futures trading is very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market. Having entered into an export contract, it enables him to hedge his risk by operating in futures market. Other benefits of futures trading are: Price stabilizationin times of violent price fluctuations - this mechanism dampens the peaks and lifts up the valleys i.e. the amplititude of price variation is reduced. Leads to integrated price structure throughout the country. Facilitates lengthy and complex, production and manufacturing activities. Helps balance in supply and

demand position throughout the year. Encourages competition and acts as a price barometer to farmers and other trade functionaries.

COMMODITIES ARE SUITABLE FOR FUTURE TRADING

The following are some of the key factors, which decide the suitability of the commodities for future trading:

The commodity should be competitive, i.e., there should be large demand for and supply of the commodity - no individual or group of persons acting in concert should be in a position to influence the demand or supply, and consequently the price substantially.

There should be fluctuations in price. The market for the commodity should be free from substantial government control. The commodity should have long shelf life and be capable of standardization and gradation.

Chapter 4

RESEARCH METHODOLOGY
RESEARCH METHODOLOGY:Research methodology is way to systematically solve the research problem. Research, in common terms refers to a search for knowledge. Research methodology consists of different steps that are generally adopted by a researcher to study the research problem along with the logic behind them.

3.1 RESEARCH DESIGN: Research design is the plan, structure and strategy of investigation conceived so as to obtain answers to research question. There are two types of research design. One is exploratory research and other is descriptive research

3.1.1 Exploratory research: I studied the company report, talked to the investor of the company and employee of the company and identified the factors influencing the research. Focus Group Interview: Ten employees and Ten respondents were surveyed and found that the identified variables were applicable in the research. 3.1.2. Descriptive research First a draft questionnaire was prepared and a pilot survey was made with 10 respondents. Based on analysis and feedback received from these respondents the questionnaire was revised and finalized.

DATA SOURCES: The study is mainly based on the data collection from primary sources. Primary data: Data collected for specific purposes in the form of questionnaire Secondary data: Data existing in the form of Books, Internet, Catalogues etc.

3.2

SAMPLING DESIGN:

Definition of population: All the investors of ShareKhan. Sampling procedure: A non probability sampling technique i.e. convenient sampling procedure was adopted. Sampling size: A sample of 62 investors were study. STATISCAL TOOLS: For the purpose of analysis, Mean and percentage methods are used for the calculation and the result was interpreted. This test was used to minimize the error of the data collected.

3.3 STATISTICAL TOOLS USED: Sample tools are used for analyze purpose, they are follows: 1. Percentage analysis 2. Chi-square test.

PERCENTAGE ANALYSIS: Percentage refers to a special kind of ratio in making comparison between two or more data and to describe relationships between the data. Percentage can also be used to compare the relative terms, the distribution of two or more series of data. Percentage= no of respondent/ total respondent100

CHI-SQUARE TEST ANALYSIS: Chi-square test is used to find whether two or more attributes are associated. In order to test the association of the attributes, null hypothesis and the alternate hypothesis are taken. Null hypothesis (HO) states: the two attributes are independent of each other.alternete hypothesis (HI) states: the two attributes are dependent on each other.

Chapter 5

OBJECTIVE

OBJECTIVE:-

1. Study of Investors Perception regarding risk & return in Derivative & Commodity Market. 2. To Study the most reliable source of information used for investment and Trading in commodity and Derivatives. 3. To understand the Reason of Trading or Non-Trading in Derivative & Commodity Market.

Chapter 6

ANALYSIS AND INTERPRETATION

ANALYSIS & INTERPRETATION:1.To ascertain the proportion of investors investing in commodity & derivative market:(i)

Invetment Options
Commodities Mutual Fund Derivatives Insurance Equity Gold post schemes Bank F.D 10 47 10 44 18 39 41

It can be seen from the graph that the respondents have given first preference for investment to bank FD than to Equity, Commodity and Derivatives and very less are interested in investment in Mutual funds, insurance and gold post schemes.

(ii)

Option in Investment in Derivatives or Commodity

100% 71% 22% Bullion 44% Oil & Oil seed 39% Spice Metal 20% Fiber F &O

To understand the reason of Trading or Non Trading in Derivatives & Commodity Market
To obtain this objective I consider the response regarding the important factors in decision making for investment in Commodity & derivatives, reasons for loss in the market and how much time people devote to learn derivative & commodity. As per Graph 1, I found out that, only two factors i.e. Leverage Benefit and Arbitrage Benefit are the most important factors in decision making for investment in Commodity & derivatives because these two factor had maximum responses. Graph-1

Important decisive factors for Investment In Derivatives and commodity

Liquidity preference Speculative Motive Arbitrage Benefit Leverage Benefit Risk Reduction 5 4 25 25 8

As per Graph -2 , I found out that people considered one or the other reason important for loss as all the reason received equal responses.

Reason for Loss in the Market

Lack of Risk taking ability Lack of Funds Availability Lack of Guidance from Broker Lack of knoledge 14 13 19 20

As per graph 3, I found that people spend around 1 hours to 2 hours in learning in Derivatives and Commodity.

Time devoted to learn Derivative and Commodities

1/2 Hours 1 Hours 21% 40% 39% 2 Hours

To know the Variability according to Demographic data I applied Chi-Square Test and the result are being considered on the basis of P-value or Significant value. The following Sample results are given for the reference. Null Hypothesis was accepted if P-value was greater than .05 and alternate Hypothesis was accepted if P-value was less than .05Sample : Null hypothesis
X1 * X8b Cross-tabulation Count X8b no X1 male female 25 12 yes 19 6 Total 44 18

Total

37

25

62 Chi-Square Tests Asymp. Sig. (2Exact Sig. (2sided) .473 .665 .470 .574 .336 .477 Exact Sig. (1sided)

Value Pearson Chi-Square Continuity Correctionb Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association N of Valid Cases .507 62 .515
a

df 1 1 1 1

sided)

.187 .522

a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 7.26. b. Computed only for a 2x2 table

As per the results given though Chi-square test the P-value is .473 which is greater than .05 so Null hypothesis will be accepted in this case that is there is no significant relationship in between the choice of considering Leaverage benefit as an important factor in making a decision to invest in derivative and commodity with the change in gender. Also with the crosstab we can see that around 50% males as well as females consider leaverage benefit an important factor.

Sample: Alternate Hypothesis

Crosstab Count X8c no X2 21-35 36-50 above 50 Total 14 18 5 37 yes 1 18 6 25 Total 15 36 11 62

Arbitrage benefit as an important factor as per Age

Yes 93% 7% 21-35 50% No 50% 45% 55%

36-50

above 50

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 9.387
a

df 2 2 1

sided) .009 .004 .008

11.200 6.946 62

a. 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.44.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .389 .389 62 Approx. Sig. .009 .009

As per the results given though Chi-square test the P-value is .009 which is less than .05 so Alternate hypothesis will be accepted in this case that is there is significant relationship in between the choice of considering Arbitrage benefit as an important factor in making a decision to invest in derivative and commodity with the change in age because if we are talking about age between 36-50 and above 50 around 50% people consider Arbitrage benefit important but in age group of 21-35 its gives 93% respondent considered Arbitrage benefit is an important factor. Also with the crosstab and the graph we can see that considering of arbitrage benefit as an important decisive factor for investment in Derivative and commodity changes with the change in age. But if we look at the value of Cramers V is .389 which shows that the strength of significance is low. All the result derives from Chi-Square test given in the table below.

Particulars

Gender ChiSquare pvalue Chi-

Age pvalue

Education ChiSquare pvalue

Occupation ChiSquare pvalue

Squa re

factor plays crucial role when you make a decision to invest in Derivatives& Commodity Leverage Benefit Arbitrage Benefit 0.515 0.022 0.473 0.0883 5.835 9.387 0.054 0.009 0.601 3.341 0.896 0.342 7.937 5.958 0.047 0.144

Reasons of lose at Derivatives& Commodity market Lack of Knowledge 0.507 0.476 1.409 Lack of Guidance from Broker Lack of Funds Availability Lack of Risk taking ability 6.3 0.847 1.487 0.12 0.358 0.223 1.927 1.327 0.932

0.494 0.382 0.515 0.627

6.11 1.382 0.544 12.091

0.106 0.723 0.909 0.007

0.657 0.374 1.417 2.919

0.883 0.946 0.701 0.404

Time will you be able to devote for learning Derivatives and Commodity

1/2 Hours 1 Hours 2 Hours

Crosstab Count X8c no X2 21-35 36-50 above 50 Total 14 18 5 37 yes

2.34 2.906 0.179

0.126 0.88 0.672

2.151 0.37 1.056

0.341 0.982 0.59

2.251 1.139 1.4

0.522 0.768 0.705

1.31 3.312 4.85

0.727 0.346 0.183

Total 1 18 6 25 15 36 11 62

Arbitrage benefit as an important factor as per Age

Yes 93% 7% 21-35 50% No 50% 45% 55%

36-50

above 50

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 9.387
a

df 2 2 1

sided) .009 .004 .008

11.200 6.946 62

a. 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.44.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .389 .389 62 Approx. Sig. .009 .009

As per the results given though Chi-square test the P-value is .009 which is less than .05 so Alternate hypothesis will be accepted in this case that is there is significant relationship in between the choice of considering Arbitrage benefit as an important factor in making a decision to invest in derivative and commodity with the change in age because if we are talking about age between 36-50 and above 50 around 50% people consider Arbitrage benefit important but in age group of 21-35 its gives 93% respondent considered Arbitrage benefit is an important factor. Also with the crosstab and the graph we can see that considering of arbitrage benefit as an important decisive factor for investment in Derivative and commodity changes with the change in age. But if we look at the value of Cramers V is .389 which shows that the strength of significance is low. All the result derives from Chi-Square test given in the table below.

Relationship between occupation and factor of decision to invest in Derivatives & commodity
Count X8b no X4 business service 16 14 yes 5 7 Total 21 21

students housewife Total

5 2 37

10 3 25

15 5 62

Arbitrage benefit as an important factor as per occupation

no 76% 67% 67% 40% 60% yes

33% 24%

33%

business

service

students

housewife

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 7.937a 8.001 6.463 62 Df 3 3 1 sided) .047 .046 .011

a. 2 cells (25.0%) have expected count less than 5. The minimum expected count is 2.02.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .358 .358 62 Approx. Sig. .047 .047

As per the results given though Chi-square test the P-value is .047 which is less than .05 so Alternate hypothesis will be accepted in this case that is there is significant relationship in between the choice of considering Arbitrage benefit as an important factor in making a decision to invest in derivative and commodity with the change in occupation because if we are talking about occupation then we will find out that 76% say no and 24% say yes who has own business to arbitrage benefit for serviceman 67% no and 33% yes to arbitrage benefit by student 33% say no and 67% say yes to arbitrage by housewife 40% say no arbitrage benefit and 60% Arbitrage benefit is an important factor. Also with the crosstab and the graph we

can see that considering of arbitrage benefit as an important decisive factor for investment in Derivative and commodity changes with the change in occupation. But if we look at the value of Cramers V is .358 which shows that the strength of significance is low.

Relationship between Education and reason of loss in market

Count x15d no X3 undergraduate graduate post graduate Ph.d Total 11 21 14 3 49 yes 3 5 0 5 13 Total 14 26 14 8 62

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 12.091a 13.088 1.412 62 Df 3 3 1 sided) .007 .004 .235

a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is 1.68.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .442 .442 62 Approx. Sig. .007 .007

As per the results given though Chi-square test the P-value is .007 which is less than .05 so Alternate hypothesis will be accepted in this case that is there is significant relationship in between the education and reason of loss at this market as an important factor in making a decision to invest in derivative and commodity with the change in Education because if we are

talking about education then we will find out that most of the people say lack of risk taking ability is the reason of loss at this market. Lack of risk taking ability is main reason for loss at this market. Also with the crosstab and the graph we can see that considering that lack of risk taking ability as an important decisive factor for investment in Derivative and commodity changes with the change in education. But if we look at the value of Cramers V is .442 which shows that the strength of significance is low.

Study of Investor perception regarding Risk and Return in derivatives and commodities:-

Return from Derivatives & Commodities are higher than Other investment avenues
Very high High Neither high nor low 0% 6% 26% 31% Low Very low

37%

Mostly people say that the return from derivative & commodity are neither high nor low as compare to other investment avenues.

Risk in derivatives and commodity Highest trading

0% 10% 5% High Neither high nor low Low 40% 45% Lowest

Mostly people say that the risk in derivative & commodity are high .

risk and return compensation in the market

0% Highest 16% 28% High

19%

Neither high nor low Low

37%

Lowest

Mostly people say that the risk and return compensation in the market are neither high nor low.

period of return from derivatives and commodities compensate the accepted risk
0% 6% weekly 34% monthly 60% annually daily

Mostly people say that the period of return from derivative & commodity compensate the accepted risk are weekly.

perception about risk and return relationship in derivatives and commodities

3% 8% High 16% Neither high nor low 47% 26% Lowest Low Highest

Mostly people have the perception about risk and return relationship in derivative & commodity are high.

To know the Variability in perception regarding risk and return according to Demographic data I applied Chi-Square Test and the result are being considered on the basis of P-value or Significant value. The following Sample results are given for the reference. Null Hypothesis was accepted if P-value was greater than .05 and alternate Hypothesis was accepted if P-value was less than .05. All the result derives from Chi-Square test given in the table below.
Factors Gender Chip-value Square 2.35 0.503 Age Chip-value Square 12.996 0.043 Education Chip-value Square 14.999 0.091 Occupation Chip-value Square 16.741 0.053

Return from Derivatives & Commodities are higher than other investment avenues? Risk in Derivatives and commodity trading Do you think risk and return compensation in this market Which period of return from derivatives and commodities compensate the accepted risk What is your perception about risk and return relationship in derivatives and commodities market

3.526 0.836 4.502

0.317 0.841 0.105

6.187 12.919 1.65

0.403 0.044 0.8

12.618 13.215 3.517

0.181 0.153 0.742

7.818 6.691 4.425

0.553 0.669 0.619

8.502

0.075

10.702

0.219

9.675

0.653

24.173

0.019

Relationship between age and return from Derivatives & Commodity

x10 neither high nor low 5 15 3 23

very high X2 21-35 36-50 above 50 0 4 0 4

high 9 7 3 19

low 1 10 5 16

Total 15 36 11 62

Total

very high 60% 33% 0% 21-35 7%

high

neither high nor low

low

42% 11% 19% 36-50

28% 0%

45% 27% 27%

above 50

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 12.996a 14.370 4.170 62 df 6 6 1 sided) .043 .026 .041

a. 8 cells (66.7%) have expected count less than 5. The minimum expected count is .71.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .458 .324 62 Approx. Sig. .043 .043

There is a strong relationship between the age and the return generated from derivatives and commodities is higher than other investment avenues because the p-value is less than 0.5 which shows a case of alternative hypothesis. But the phi and cramers V value is 0.458.
Relationship between Age and Risk and return compensation
Count x12 neither high nor very high X2 21-35 36-50 above 50 Total 5 5 0 10 high 4 8 0 12 low 5 13 5 23 low 1 10 6 17 Total 15 36 11 62

very high

high

neither high nor low

low 45% 55%

33%

27%

33% 7% 14% 22%

36%

28% 0% 0% above 50

21-35

36-50

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 12.919
a

df 6 6 1

sided) .044 .011 .001

16.485 11.787 62

a. 7 cells (58.3%) have expected count less than 5. The minimum expected count is 1.77.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .456 .323 62 Approx. Sig. .044 .044

There is a strong relationship between the age and the risk and return compensation in the market because the p-value is less than 0.5 which shows a case of alternative hypothesis. But the phi and cramers V value is 0.456.

Relationship between Occupation and perception about risk and return

Count x14 neither high nor low 4 6 6 0 16

very high X4 business service students housewife 2 0 0 0 2

high 6 11 9 3 29

low 7 3 0 0 10

very low 2 1 0 2 5

Total 21 21 15 5 62

Total

very high

high

neither high nor low 60% 40% 0%

low

very low 60%

29%19%33% 10% 10% business

0%

52% 29% 14% 5% service

40% 0% 0%

0% 0% students

0%

housewife

Chi-Square Tests Asymp. Sig. (2Value Pearson Chi-Square Likelihood Ratio Linear-by-Linear Association N of Valid Cases 24.173a 26.386 .873 62 Df 12 12 1 sided) .019 .009 .350

a. 15 cells (75.0%) have expected count less than 5. The minimum expected count is .16.

Symmetric Measures Value Nominal by Nominal Phi Cramer's V N of Valid Cases .624 .361 62 Approx. Sig. .019 .019

There is a strong relationship between the occupation and the perception about risk and return relationship in derivatives and commodities because the p-value is less than 0.5 which shows a case of alternative hypothesis. But the phi and cramers V value is 0.624.

To study the most reliable source of information used for investment & trading in Derivative & Commodity market

Medium most used for Information to Invest in Derivatives & Commodity

News channels 6

Magazine

Internet 10

41

Broker

In this following medium which is used for Information to invest in Derivatives & Commodity I takes only Internet because it is used by maximum 41 respondent and other medium have very low respondent in comparison to Internet.

Medium of Information for trading in Derivatives & Commodity

Tax Consultant Internet News Paper News Channels Broker/Agent Independently 20 45 8 28 6 50

In this following medium of Information to take decision for trading in Derivatives & Commodity I takes for medium in my study which is Independently, Broker/Agent, News channels and Internet which is mainly used by the investor at the time of investing in Derivatives & Commodity according my correspondent.

Most reliable medium for trading in Derivatives & Commodity

Online Franchises Stock Broking Company 11 27 24

In this graph most of the people reliable over the stock Broking company which is 27 next medium is online which is 24 and franchises have lowest 11 respondent according to my study.

To know the Variability according to Demographic data, I applied Chi-Square Test and the result are being considered on the basis of P-value or Significant value. The following Sample results are given for the reference. Null Hypothesis was accepted if P-value was greater than .05 and alternate Hypothesis was accepted if P-value was less than .05 The results of test are applied given below:
Gender Chip-value Square Medium(Internet) 0.003 0.954 Age Chip-value Square 2.698 0.26 Education Chip-value Square 2.016 0.569 0.143 0.561 0.708 0.933 0.948 Occupation Chip-value Square 1.112 2.276 2.727 3.625 0.618 7.231 0.774 0.517 0.436 0.305 0.892 0.3

Medium most used for Information to Invest in Derivatives & Commodity Medium for Information to take a Decision if trading in Derivatives & Commodity Decision by(Independently) 1.474 0.225 0.007 0.997 5,429 Decision by(Broker/Agent) 2.33 0.629 3.434 0.18 2.057 Decision by(News Channels) 1.106 0.293 1.3 0.522 1.388 Decision by(Internet) 0.117 0.732 0.936 0.626 0.433 Most reliable medium for trading in Derivatives & Commodity Reliable Medium 0.414 0.813 7.18 0.127 1.657

As we can in the table that there is no significant relationship in between the demographic data and factors tested, that is respondent are indifferent in choosing different information methods to trade or invest in stock market.

Chapter 7

ANNEXURE
CONCLUSION & FINDINGS
(1) Most of the respondents prefer to invest in FDs. (2) There is a relationship between age and the factor affecting in making decision to invest in derivative and commodity trading. (3) There is a relationship between demographic factors and the parameters chosen for making decision regarding derivative and commodity trading. (4) There is a significant relationship between the demographic data and the perception regarding risk and return in derivative and commodity market. (5) The factors play crucial role in making the decision from the different resources. (6) There is a relationship between the investor perception and demographic factors. (7) In commodity most of the respondent prefer to invest in metal which is 71%. (8) In Derivatives 100% respondent all prefer to invest in future and option. (9) According to study leverage benefit and arbitrage benefit is the most reliable factor to make a decision to invest in Derivatives & commodity. (10) Internet is the most preferable source of trading in Derivatives & commodity.

LIMITATION OF THE STUDY

The study has covered only Delhi and NCR. This study has considered convenient sampling procedure.

BIBLOGRAPHY

Share Khan Customer database. Internet search engine. http://www.sharekhan.com

JOURNALS & MAZAGINES: Business World Company Journals The Economic Times The Financial Express The Times of India

QUESTIONAIRE
1. Gender i) Male 2. Age i) 21-35 3. Education i) iv) Under Graduate Ph. D. ii) Graduate iii) Post Graduate ii) 36-50 iii) Above 50 ii) Female

4. Occupation i) Business ii) Service iii) Students iv) House wife

5 Do you invest Your surplus money in saving instrument? i) Yes 6 If YES, Where do you invest your savings? i) Bank F.D v) Derivatives ii) Gold post schemes vi) Mutual Fund iii) Equity iv) Insurance ii) No

vii) Commodities

7 If you invest in Derivatives OR Commodity, Which would be your first preference from the list given below? i) Bullion vi) F & O 8 Which factor plays crucial role when you make a decision to invest in Derivatives& Commodity? i) Risk Reduction ii) Leverage Benefit iii) Arbitrage Benefit iv) Speculative Motive ii) Oil & Oil seed iii) Spices iv) Metal v) Fiber

v) Liquidity preference 9 Information from which mediums do you use for invest in Derivatives & Commodity? i) Broker ii) Internet iii) Magazine iv) News Channels

10 Do you think now a days return from Derivatives & Commodities are higher than Other investment avenues? Very high High Neither high nor low Low Very low

11. Risk in Derivatives and commodity trading is Highest high neither high nor low low lowest

12. Do you think risk and return compensation in this market is Highest high neither high nor low low lowest

13 Which period of return from derivatives and commodities compensate the accepted risk? i. ii. iii. iv. Daily Weekly Monthly Annually

14. What is your perception about risk and return relationship in derivatives and commodities market i. Highest ii. High iii. Neither high nor low iv. Low v. lowest

15. What are the reasons of lose at this market? i) Lack of Knowledge ii) Lack of Guidance from Broker iii) Lack of Funds Availability iv) Lack of Risk taking ability: 16 How do You take decisions If You want to trade in Derivatives & Commodity? i) Independently iv) News Paper ii) Broker /Agent v) Internet iii) News Channels

vi) Tax Consultant

17 How much time will you be able to devote for learning Derivatives ORCommodity? i) ii) iii) 1/2 Hours 1 Hours 2 Hours

18 According to You, Which medium is the most reliable for trading in Derivatives& Commodity ? i) ii) Stock Broking Company Franchises Online

iii)