A

RESEARCH PROJECT REPORT

ON
INVESTORS PREFERNCE OF COMMODITY MARKETS WITH SPECIAL

REFERANCE TO SHAREKHAN

SUBMITTED IN THE PARTIAL FULFILMENT OF THE REQUIREMENTS

FOR THE AWARD OF THE DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

From
Dr. A.P.J Abdul Kalam Technical University, Lucknow
(Session 2015-2017)

SUBMITTED TO: SUBMITTED BY:

Dr. Sandeep kumar ALISHA SHARMA
(HOD) MBA - 4th Sem.
Roll No.: 1507270027

IIMT Management College, Meerut

Ganga Nagar, Meerut (UP)
1
 DECLARATION

I, ALISHA SHARMA M.B.A (4th Semester) IIMT Management College, Meerut hereby

declare that Summer Training Report entitled to INVESTORS PREFERNCE OF

COMMODITY MARKETS WITH SPECIAL REFERANCE TO SHAREKHAN is an

original work and the same has not been submitted to any other institute for the award of other

degree.

A seminar presentation of the Research Report was made on date and the suggestions as

approved by the faculty were duly incorporated.

Date : Signature of the Candidate

Place: Place: Aalisha sharma

2
 ACKNOWLEDGEMENT

I am thankful to MRS.MANY KANSAL for being my project guide.

My profound thanks to SANDEEP KUMAR ,IIMT MANAGEMENT COLLEGE , who

was patient in giving direction to my project in his capacity.

I express my sincere gratitude to INVESTORS PREFERNCE OF COMMODITY

MARKETS WITH SPECIAL REFERANCE TO SHAREKHAN

and other personnel staff for guiding and encouraging me to the completion of project on time.

I am grateful to my parents for their continuous support right from the beginning of my
project to the submission of this report.

ALISHA SHARMA

1507270027

3
 CHAPTER-I

INTRODUCTION

1.1. INTRODUCTION TO THE STUDY

The main idea behind the study conducted was to find out the investors

preference of commodity market with reference to Share khan Financial

Services Pvt. Ltd, Gobi.

This study should deal with the investors preference from commodity

market. To identify the investors preference means, it should find out the

characteristics of investors who invest under the guidance of different share

brokers. It also should concentrate on whether they are satisfied with the

services and earnings from the commodity market to provided by the

investment an also by the brokers service.

They will be expecting different types of commodities from their

investment guide. Some of them may not be satisfied with their service and

the information they give. My aim is to find out the investors preference from

commodity market of the investors from their share brokers. How is investors

satisfaction from commodity market satisfaction level can be improved by

providing better services. Keeping all these things in mind the primary

and secondary objectives of the study are set.

MEANING OF INVESTOR:
4
 An investor is any party that makes an investment. The term has

taken on a specific meaning in finance to describe the particular types of

people and companies that regularly purchase equity or debt securities for

financial gain in exchange for funding an expanding company.

Less frequently, the term is applied to parties who purchase real estate,

currency, commodity derivatives, personal property, or other assets. The

term implies that a party purchases and holds assets in hopes of achieving

capital gain or cash flow, not as a profession or for short-term income.

Types of investors:

Here is an overlapping, non-exclusive list of investor types:

Individual investors (including trusts on behalf of individuals, and

umbrella companies formed for two or more to pool investment funds).

Collectors of art, antiques, and other things of value.

Angel investors, either individually or in groups.

Venture capital funds, which serve as investment collectives on behalf of

individuals, companies, pension plans, insurance reserves, or other funds.

Investment banks.

Businesses that make investments, either directly or via a captive fund

Investment trusts, including real estate investment trusts

Mutual funds, hedge funds, and other funds, ownership of which may or

may not be publicly traded (these funds typically pool money raised from

their owner-subscribers to invest in securities)

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 Sovereign wealth funds

Commodity Market is an organized traders' exchange in which standardized,

graded products are bought and sold. Worldwide, there are 48 major

commodity exchanges that trade over 96 commodities, ranging from wheat

and cotton to silver and oil. Most trading is done in futures contracts, that is,

agreements to deliver goods at a set time in the future for a price established

at the time of the agreement.

Trading of S&P 500 and other financial futures has broken down

some of the barriers that once separated stock, bond, and commodity markets

and made it easier for investors to hedge their stock investments. Critics

charge that the futures trading at the commodity markets in Chicago have

made stock prices more volatile.

The Chicago Board of Trade is the largest futures and options

exchange in the United States, the largest in the world is Eurex, an electronic

European exchange.

Types of traders in a derivatives market:

Hedgers:

Hedgers are those who protect themselves from the risk associated

with the price of an asset by using derivatives. A person keeps a close watch

upon the prices discovered in trading and when the comfortable price is

6
reflected according to his wants, he sells futures contracts. In this way he gets

an assured fixed price of his produce.

In general, hedgers use futures for protection against adverse future

price movements in the underlying cash commodity. Hedgers are often

businesses, or individuals, who at one point or another deal in the underlying

cash commodity. Take an example: A Hedger pay more to the farmer or dealer

of a produce if its prices go up. For protection against higher prices of the

produce, he hedges the risk exposure by buying enough future contracts of

the produce to cover the amount of produce he expects to buy. Since cash and

futures prices do tend to move in tandem, the futures position will profit if the

price of the produce raise enough to offset cash loss on the produce.

Speculators:

Speculators are some what like a middle man. They are never

interested in actual owing the commodity. They will just buy from one end and

sell it to the other in anticipation of future price movements. They actually bet

on the future movement in the price of an asset. They are the second major

group of futures players. These participants include independent floor traders

and investors. They handle trades for their personal clients or brokerage

firms. Buying a futures contract in anticipation of price increases is known as

going long. Selling a futures contract in anticipation of a price decrease is

known as going short. Speculative participation in futures trading has

increased with the availability of alternative methods of participation.

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Speculators have certain advantages over other investments they are as

follows:

If the traders judgment is good, he can make more money in the

futures market faster because prices tend, on average, to change more quickly

than real estate or stock prices. Futures are highly leveraged investments. The

trader puts up a small fraction of the value of the underlying contract as

margin, yet he can ride on the full value of the contract as it moves up and

down. The money he puts up is not a down payment on the underlying

contract, but a performance bond. The actual value of the contract is only

exchanged on those rare occasions when delivery takes place.

Arbitrators:

According to dictionary definition, a person who has been officially

chosen to make a decision between two people or groups who do not agree is

known as Arbitrator. In commodity market Arbitrators are the person who

takes the advantage of a discrepancy between prices in two different markets.

If he finds future prices of a commodity edging out with the cash price, he will

take offsetting positions in both the markets to lock in a profit. Moreover the

commodity futures investor is not charged interest on the difference between

margin and the full contract value.

Uses of Futures Markets:

In this chapter, the uses of futures markets, especially in connection

with futures commodity and their possible uses for the farmers, traders,

banks and others have been reviewed.

8
Hedging:

The hedger is a trader who enters the futures market in order to

reduce a pre-existing risk position. Having a position does not mean that the

trader must actually own a commodity. An individual or a firm who

anticipates the need for a certain commodity in the future or a person who

plans to acquire a certain commodity later also has a position in that

commodity. In many cases, the hedger has a certain hedging horizon the

future date when the hedge will terminate. The hedge can be a long hedge or a

short hedge. If the hedger buys futures contract to hedge, it will be a long

hedge.

For example, a roller flourmill owner may like to lock-in the price of

the wheat that he wants to purchase three months later by purchasing wheat

futures. If three months later the wheat prices rise, carrying futures prices

along with them, the flourmill owner will purchase wheat from the spot

market at a higher price. The loss that he may suffer in the cash market will

be compensated by sale of futures at a higher price. Similarly, a farmer can

sell three-month futures at the prevailing price and lock-in his profits at that

level. If the prices fall, the loss suffered by the farmer in the cash market will

be compensated by the profit that the farmer will earn by squaring the

transaction in the futures market.

In practice, hedging solutions are not as neat as the ones described

above. In the above example, the goods in question were exactly the same

both in the cash and the futures market, the amounts purchased / sold in the

cash market matched the futures contract amounts, and the hedging horizons

of the farmer and the mill owner matched the delivery dates of the futures
9
contracts. It will be rare for all factors to match perfectly; they will differ in

time span covered, the amount of commodity or the physical characteristics of

the commodity that are traded in the cash and the futures markets. Such

hedges are known as cross-hedges. In such cases, the hedger must trade the

right number and kind of futures contract to control the risk in hedged

positions as much as possible. There can be situations where the hedger does

not have any definite hedging horizon and may enter into what is known as

risk-minimizing hedge.

The hedger has many incentives. Tax is a major incentive. In an un-

hedged situation, the profits fluctuate widely and the person / firm may have

to pay taxes in the high profit years while he is not able to utilize the tax

credits when he runs into losses. Hedging also serves to minimize the cost of

financial distress. Widely fluctuating profits may drive many persons / firms

to bankruptcy. In an idealized world with no transaction costs, which is

inhabited by homo-economics this may not be a factor. In the real world,

bankruptcy involves avoidable human misery and prolonged winding up

procedures.

Role of Speculators:

Derivative markets have long been viewed with suspicion as

speculators are the most visible players. We consider it appropriate to

emphasize that functioning derivative markets will have speculators who need

10
to be viewed from the point of view of their economic usefulness and who need

to be regulated with a view to preventing systemic instability.

A speculator is a trader who enters the futures market in search of

profit and, by so doing, willingly accepts increased risks. Different types of

speculators may be categorized by the length of time they plan to hold a

position. Traditionally, there are three kinds of speculators: scalpers, day

traders and position traders.

Scalpers time horizon is the shortest, ranging from the next few

seconds to the next few minutes and they make profits that may be only one

or two ticks, the minimum allowable price movement. If the prices do not

move in the scalpers direction within a few minutes of assuming a position,

the scalper will like to close the position and begin looking for a new

opportunity. It is understood that scalpers do not go by the demand and

supply positions of the underlying commodity but act on the sentiment.

They generate enormous amounts of transactions and are able to

survive as they pay minimum transaction cost. Besides earning profits for

themselves, their main role is to provide liquidity in the market. They provide

a party willing to take the opposite side of a trade for other traders; hedgers

know that their orders can be executed.

By actively trading, they generate price quotations thereby allowing

markets to discover prices more effectively. By competing for trades, they help

close the bid-ask spread.

Day Traders close their position before the end of trading each day.

Their strategy is to guess the price movements on account of developments

11
during the day, including announcement of government policies and release of

data. Position Traders maintain overnight positions, which may run into

weeks or even months. They may hold outright positions in which they run

huge risks and may also earn big profits.

The more risk averse among them assume spread positions which

may involve relative price movements in different contracts on the same

underlying commodities or commodities which are closely related. It is

pertinent to examine whether hedgers need speculators. Theoretically, if there

are sufficiently large numbers of short and long hedgers, they may fulfill each

others need and the speculators may have no role. However, in practice, there

is always a mismatch between the time when the short and long hedgers

would approach the market and the speculators fill in this gap.

Leading commodity markets of world:

Some of the leading exchanges of the world are New York Mercantile

Exchange (NYMEX), the London Metal Exchange (LME) and the Chicago Board

of Trade (CBOT).

Leading commodity markets of India:

The government has now allowed national commodity exchanges,

similar to the BSE & NSE, to come up and let them deal in commodity

derivatives in an electronic trading environment. These exchanges are

expected to offer a nation-wide anonymous, order driven; screen based

trading system for trading. The Forward Markets Commission (FMC) will

regulate these exchanges.

12
1.2 INTRODUCTION TO THE INDUSTRY PROFILE

Commodity markets are markets where raw or primary products are

exchanged. These raw commodities are traded on regulated commodities

exchanges, in which they are bought and sold in standardized contracts.

This article focuses on the history and current debates regarding global

commodity markets. It covers physical product (food, metals, and electricity)

markets but not the ways that services, including those of governments, nor

investment, nor debt, can be seen as a commodity. Articles on reinsurance

markets, stock markets, bond markets and currency markets cover those

concerns separately and in more depth. One focus of this article is the

relationship between simple commodity money and the more complex

instruments offered in the commodity markets.

1. History

The modern commodity markets have their roots in the trading of

agricultural products. While wheat and corn, cattle and pigs, were widely

traded using standard instruments in the 19th century in the United States,

other basic foodstuffs such as soybeans were only added quite recently in

most markets. For a commodity market to be established there must be very

broad consensus on the variations in the product that make it acceptable for

one purpose or another.

The economic impact of the development of commodity markets is

hard to overestimate. Through the 19th century "the exchanges became

13
effective spokesmen for, and innovators of, improvements in transportation,

warehousing, and financing, which paved the way to expanded interstate and

international trade.

Early history of commodity markets

Historically, dating from ancient Sumerian use of sheep or goats,

other peoples using pigs, rare seashells, or other items as commodity money,

people have sought ways to standardize and trade contracts in the delivery of

such items, to render trade itself more smooth and predictable.

Commodity money and commodity markets in a crude early form are

believed to have originated in Sumer where small baked clay tokens in the

shape of sheep or goats were used in trade. Sealed in clay vessels with a

certain number of such tokens, with that number written on the outside, they

represented a promise to deliver that number. This made them a form of

commodity money - more than an I.O.U. but less than a guarantee by a

nation-state or bank. However, they were also known to contain promises of

time and date of delivery - this made them like a modern futures contract.

Regardless of the details, it was only possible to verify the number of tokens

inside by shaking the vessel or by breaking it, at which point the number or

terms written on the outside became subject to doubt. Eventually the tokens

disappeared, but the contracts remained on flat tablets. This represented the

first system of commodity accounting.

Classical civilizations built complex global markets trading gold or

silver for spices, cloth, wood and weapons, most of which had standards of
14
quality and timeliness. Considering the many hazards of climate, piracy, theft

and abuse of military fiat by rulers of kingdoms along the trade routes, it was

a major focus of these civilizations to keep markets open and trading in these

scarce commodities. Reputation and clearing became central concerns, and

the states which could handle them most effectively became very powerful

empires, trusted by many peoples to manage and mediate trade and

commerce.

2. Size of the market

The trading of commodities consists of direct physical trading and

derivatives trading. Exchange traded commodities have seen an upturn in the

volume of trading since the start of the decade. This was largely a result of the

growing attraction of commodities as an asset class and a proliferation of

investment options which has made it easier to access this market.

The global volume of commodities contracts traded on exchanges

increased by a fifth in 2010, and a half since 2008, to around 2.5 billion

million contracts. During the three years up to the end of 2010, global

physical exports of commodities fell by 2%, while the outstanding value of

OTC commodities derivatives declined by two-thirds as investors reduced risk

following a five-fold increase in value outstanding in the previous three years.

Trading on exchanges in China and India has gained in importance in recent

years due to their emergence as significant commodities consumers and

producers. China accounted for more than 60% of exchange-traded

commodities in 2009, up on its 40% share in the previous year.

15
 Commodity assets under management more than doubled between

2008 and 2010 to nearly $380bn. Inflows into the sector totalled over $60bn

in 2010, the second highest year on record, down from the record $72bn

allocated to commodities funds in the previous year. The bulk of funds went

into precious metals and energy products. The growth in prices of many

commodities in 2010 contributed to the increase in the value of commodities

funds under management.

3. Commodity Trading

3.1. Spot trading

Spot trading is any transaction where delivery either takes place

immediately, or with a minimum lag between the trade and delivery due to

technical constraints. Spot trading normally involves visual inspection of the

commodity or a sample of the commodity, and is carried out in markets such

as wholesale markets. Commodity markets, on the other hand, require the

existence of agreed standards so that trades can be made without visual

inspection.

3.2. Forward contracts

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 A forward contract is an agreement between two parties to exchange

at some fixed future date a given quantity of a commodity for a price defined

today. The fixed price today is known as the forward price.

3.3. Futures contracts

A futures contract has the same general features as a forward

contract but is transacted through a futures exchange.

Commodity and futures contracts are based on whats termed

forward contracts. Early on these forward contracts agreements to buy

now, pay and deliver later were used as a way of getting products from

producer to the consumer. These typically were only for food and agricultural

products. Forward contracts have evolved and have been standardized into

what we know today as futures contracts. Although more complex today, early

forward contracts for example, were used for rice in seventeenth century

Japan. Modern forward, or futures agreements began in Chicago in the

1840s, with the appearance of the railroads. Chicago, being centrally located,

emerged as the hub between Midwestern farmers and producers and the east

coast consumer population centers.

In essence, a futures contract is a standardized forward contract in

which the buyer and the seller accept the terms in regards to product, grade,

quantity and location and are only free to negotiate the price.

3.4. Hedging

Hedging, a common practice of farming cooperatives insures against

a poor harvest by purchasing futures contracts in the same commodity. If the

17
cooperative has significantly less of its product to sell due to weather or

insects, it makes up for that loss with a profit on the markets, since the

overall supply of the crop is short everywhere that suffered the same

conditions.

3.5. Delivery and condition guarantees

In addition, delivery day, method of settlement and delivery

point must all be specified. Typically, trading must end two (or more) business

days prior to the delivery day, so that the routing of the shipment can be

finalized via ship or rail, and payment can be settled when the contract

arrives at any delivery point.

4. Standardization

U.S. soybean futures, for example, are of standard grade if they are

"GMO or a mixture of GMO and Non-GMO No. 2 yellow soybeans of Indiana,

Ohio and Michigan origin produced in the U.S.A. (Non-screened, stored in

silo)," and of deliverable grade if they are "GMO or a mixture of GMO and Non-

GMO No. 2 yellow soybeans of Iowa, Illinois and Wisconsin origin produced in

the U.S.A. (Non-screened, stored in silo)." Note the distinction between states,

and the need to clearly mention their status as GMO (Genetically Modified

Organism) which makes them unacceptable to most organic food buyers.

Similar specifications apply for cotton, orange juice, cocoa, sugar,

wheat, corn, barley, pork bellies, milk, feedstuffs, fruits, vegetables, other

grains, other beans, hay, other livestock, meats, poultry, eggs, or any other

commodity which is so traded.

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5. Regulation of commodity markets

In the United States, the principal regulator of commodity and

futures markets is the Commodity Futures Trading Commission but it is

the National Futures Association that enforces rules and regulations put forth

by the CFTC.

5.1. Oil

Building on the infrastructure and credit and settlement networks

established for food and precious metals, many such markets have

proliferated drastically in the late 20th century. Oil was the first form of

energy so widely traded, and the fluctuations in the oil markets are of

particular political interest.

Some commodity market speculation is directly related to the stability

of certain states, e.g., during the Persian Gulf War, speculation on the

survival of the regime of Saddam Hussein in Iraq. Similar political stability

concerns have from time to time driven the price of oil.

The oil market is an exception. Most markets are not so tied to the

politics of volatile regions - even natural gas tends to be more stable, as it is

not traded across oceans by tanker as extensively.

5.2 .Commodity markets and protectionism

Developing countries (democratic or not) have been moved to harden

their currencies, accept International Monetary Fund rules, join the World

Trade Organization (WTO), and submit to a broad regime of reforms that

19
amount to a hedge against being isolated. China's entry into the WTO

signaled the end of truly isolated nations entirely managing their own

currency and affairs. The need for stable currency and predictable clearing

and rules-based handling of trade disputes, has led to global trade hegemony

- many nations hedging on a global scale against each other's

anticipated protectionism, were they to fail to join the WTO.

There are signs, however, that this regime is far from perfect. U.S.

trade sanctions against Canadian softwood lumber (within NAFTA) and foreign

steel (except for NAFTA partners Canada and Mexico) in 2002 signaled a shift

in policy towards a tougher regime perhaps more driven by political concerns -

jobs, industrial policy, even sustainable forestry and logging practices.

5.3. Commodity Exchanges

A brief description of commodity exchanges is those which trade in

particular commodities, neglecting the trade of securities, stock index futures

and options etc.

In the middle of 19th century in the United States, businessmen

began organizing market forums to make the buying and selling of

commodities easier. These central marketplaces provided a place for buyers

and sellers to meet, set quality and quantity standards, and establish rules of

business.

Agricultural commodities were mostly traded but as long as there are

buyers and sellers, any commodity can be traded. In 1872, a group of

Manhattan dairy merchants got together to bring chaotic condition in New

20
York market to a system in terms of storage, pricing, and transfer of

agricultural products.

In 1933, during the Great Depression, the Commodity Exchange, Inc.

was established in New York through the merger of four small exchanges the

National Metal Exchange, the Rubber Exchange of New York, the National Raw

Silk Exchange, and the New York Hide Exchange.

The major commodity markets are in the United Kingdom and in the
USA. In India there are 25 recognized future exchanges, of which there are

three national level multi-commodity exchanges. After a gap of almost three

decades, Government of India has allowed forward transactions in

commodities through Online Commodity Exchanges, a modification of

traditional business known as Adhat and Vayda Vyapar to facilitate better risk

coverage and delivery of commodities. The three exchanges are:

National Commodity & Derivatives Exchange Limited (NCDEX)

Multi Commodity Exchange of India Limited (MCX)

National Multi-Commodity Exchange of India Limited (NMCEIL)

All the exchanges have been set up under overall control of Forward Market

Commission (FMC) of Government of India.

6. National Commodity & Derivatives Exchange Limited (NCDEX)

National Commodity & Derivatives Exchange Limited (NCDEX)

located in Mumbai is a public limited company incorporated on April 23, 2003

under the Companies Act, 1956 and had commenced its operations on

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December 15, 2003.This is the only commodity exchange in the country

promoted by national level institutions. It is promoted by ICICI Bank Limited,

Life Insurance Corporation of India (LIC), National Bank for Agriculture and

Rural Development (NABARD) and National Stock Exchange of India Limited

(NSE). It is a professionally managed online multi commodity exchange.

NCDEX is regulated by Forward Market Commission and is subjected to

various laws of the land like the Companies Act, Stamp Act, Contracts Act,

Forward Commission (Regulation) Act and various other legislations.

7. Multi Commodity Exchange of India Limited (MCX)

Headquartered in Mumbai Multi Commodity Exchange of India

Limited (MCX), is an independent and de- mutualised exchange with a

permanent recognition from Government of India. Key shareholders of MCX

are Financial Technologies (India) Ltd., State Bank of India, Union Bank of

India, Corporation Bank, Bank of India and Canara Bank. MCX facilitates

online trading, clearing and settlement operations for commodity futures

markets across the country.

MCX started offering trade in November 2003 and has built strategic

alliances with Bombay Bullion Association, Bombay Metal Exchange, Solvent

Extractors Association of India, Pulses Importers Association and Shetkari

Sanghatana.

8. National Multi-Commodity Exchange of India Limited (NMCEIL)

National Multi Commodity Exchange of India Limited (NMCEIL) is the

first de- mutualized, Electronic Multi-Commodity Exchange in India. On 25th

July, 2001, it was granted approval by the Government to organize trading in

22
the edible oil complex. It has operationalised from November 26, 2002. It is

being supported by Central Warehousing Corporation Ltd., Gujarat State

Agricultural Marketing Board and Neptune Overseas Limited. It got its

recognition in October 2002.

Commodity exchange in India plays an important role where the

prices of any commodity are not fixed, in an organized way. Earlier only the

buyer of produce and its seller in the market judged upon the prices. Others

never had a say. Today, commodity exchanges are purely speculative in

nature. Before discovering the price, they reach to the producers, end-users,

and even the retail investors, at a grassroots level. It brings a price

transparency and risk management in the vital market. A big difference

between a typical auction, where a single auctioneer announces the bids and

the Exchange is that people are not only competing to buy but also to sell. By

Exchange rules and by law, no one can bid under a higher bid, and no one

can offer to sell higher than someone elses lower offer. That keeps the market

as efficient as possible, and keeps the traders on their toes to make sure no

one gets the purchase or sale before they do.

23
 CHAPTER-II

2.1. INTRODUCTION TO THE COMPANY PROFILE:

Share khan financial service Pvt. Ltd.

Share khan is Indias leading online retail broking house. Launched

on February 8, 2000 as an online trading portal, Share khan has today a pan-

India presence with over 1,529 outlets serving 950,000 customers across 450

cities. It also has international presence through its branches in the UAE and

Oman. Share khan offers services like portfolio management, trade execution

in equities, futures & options, commodities, and distribution of mutual funds,

insurance and structured products. These services are backed by quality

investment advice from an experienced research team which offers investment

and trading ideas based on fundamental and technical research respectively,

market related news, statistical information on equities, commodities, mutual

funds, IPOs and much more. Sharekhan is a member of the Bombay Stock

Exchange, the National Stock Exchange and the countrys two leading

commodity exchanges, the NCDEX and MCX. Sharekhan is also registered as

24
a depository participant with National Securities Depository and Central

Depository Services. Sharekhan has set category leadership through

pioneering initiatives like Trade Tiger, an Internet-based executable

application that emulates a broker terminal besides providing information and

tools relevant to day traders. Its second initiative, First Step, is targeted at

empowering the first-time investors. Sharekhan has also set its global

footprint through the India First initiative, a series of seminars conducted by

Sharekhan to help the non-resident Indians participate and benefit from the

huge investment opportunities in India.

SHAREKHAN TIMELINE

2.2 TOP MANAGEMENT:

Mr. Tarun Shah

CEO, Sharekhan

A Science graduate from St. Xaviers College, Mumbai, Tarun Shah

started his professional life in sales and marketing in a chemicals company.

His hands-on approach and rich experience in sales led him to higher

challenges that the capital markets provided.

25
 In 1987, Mr Shah joined SSKI, a brokerage firm with over five

decades of legendary service to its credit. The capital market at that time was

undergoing a sea change in terms of character and SSKI under the vision and

guidance of Shripal Morakhia and the commitment and hard work of Mr Shah

was able to change and adopt the new business practices to achieve a

significant growth in a competitive environment. Since then SSKI has achieved

growth in each of its businesses: Institutional broking, retail broking and

corporate Finance. Starting with the retail broking business of SSKI in

Bombay and developing a sub-broker network across the country, Mr Shah

was also instrumental in successfully setting up the Institutional Trading

Desk of SSKI.

Accepting new challenges is a way of life for Mr Shah. To ensure that

SSKIs foray into retail stock broking business through Sharekhan is as

successful as every other venture of SSKI, Mr Shah moved in to spearhead

this new effort as the CEO of Sharekhan, the retail broking arm of SSKI.

Mr. Jaideep Arora

Director, Product Development

Jaideep Arora, completed his B.Tech from IIT (Kanpur) and his PGDM

from IIM, Kolkata.He worked with ICICI for 8 years where his work spanned a

gamut of functions, which included project finance, equity sales and

brokerage, investments etc. During his tenure there he set up and headed the

Institutional Equity Brokerage Desk at ICICI Securities & Finance Co. Ltd.

Mr Arora joined Sharekhan in June 2000 as the head of the Product

development division. A year later he took over the reins of the online
26
business of Sharekhan. At present Mr Aroras responsibilities include

spearheading Sharekhans online foray as well as its overall customer

acquisition effort.

Mr. Shanker Vailaya

Director, Operations, Finance and Legal Functions

A graduate in Commerce from the University of Mangalore and an

Associate of The Member of the Institute of Chartered Accountants of India,

Shankar Vailaya heads the operations, finance and legal functions of

Sharekhan. He is responsible for settlements, depository operations, risk and

compliance, regulatory and other legal commitments, and treasury.

Mr.Vailaya has managed Sharekhans broking operations through the

most turbulent times in the aftermath of the securities scam in 1992 and

successfully steered the company clear of a flurry of bad papers that hit the

market during 1994-95.

2.3 PRODUCTS & SERVICES:

I.FIRST STEP:

Let the experts guide you!

Always wanted help on what the stock market is all about? Been

wondering about how all this works? Well, you don't need to fret any more -

the Sharekhan First Step is a brand new program designed especially for

those who are new to investing in shares. All you have to do is open a

27
Sharekhan First Step account and we'll guide you through the investing

process. Click here to learn more about the Sharekhan First Step program.

Looking for Answers?

Do you have a lot of unanswered questions about stocks and the

stock market? We've created special information tools for you, to help answer

any queries you may have. All you have to do is sign up to receive all the tools

you need to understand the markets and invest in shares! Click here to get a

free FirstStep Information Kit.

What does the program consist of?

In the complex world of investing in shares in India, interested

beginners like you didn't have any place they could start out from. This is why

we started the First Step program - to assist and guide new investors when

they take their first steps into the world of investing in shares. This program is

explicitly designed for beginners. You will not feel unintelligent when asking

questions like "Who owns the Stock Market?" or "What is a stock-split?" since

our people are trained to assist those taking their first step in the market.

II.CLASSIC ACCOUNT:

Hassle Free Investing, Online, Anytime Anywhere

Presenting the easiest way to control your investments with a click of

a button. With live stock prices, online cash transfer and instant order

execution you get complete freedom from boring paper-work. Our friendly

28
customer service representatives are accessible via toll-free phone, email and

live online chat

Proven Research, Timely Advice.

Get live analysis before, during & after market hours. From daily

intra-day calls to long-term stock recommendations, you will get timely advice

with well-defined profit targets. In addition, you can invest in the companies

that form part of our Top Picks research basket

III.ULTIMATE ONLINE TRADING PLATFORM-TRADE TIGER:

Advantages:

Multiple Exchange

Internatinational Market Watch

24 Hour Market Access

One Click Filter

Unlimited Charts

Create your own technical rules for trading

A single Trading Screen for all segments

Live Streaming Quotes

Access all Trading Calls

Advanced Charting features

29
Features:

1. A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX,
NCDEX, Mutual Funds, IPOs.

2. Multiple Market Watch available on Single Screen.

3. Multiple Charts with Tick by Tick Intraday and End of Day Charting
powered with various Studies.

4. Graph Studies include Average, Band- Bollinger, Know Sure Thing,

MACD, RSI, etc.

5. Apply studies such as Vertical, Horizontal, Trend, Retracement & Free

lines.

6. User can save his own defined screen as well as graph template that is,
saving the layout for future use.

7. User-defined alert settings on an input Stock Price trigger.

8. Tools available to gauge market such as Tick Query, Ticker, Market

Summary, Action Watch, Option Premium Calculator, Span Calculator.

9. Shortcut key for FAST access to order placements & reports.

10. Online fund transfer activated with 12 Banks.

IV.MUTUAL FUND INVESTMENT:

Mutual Funds Online Freedom & Flexibility:

Invest in Mutual Funds online with your Sharekhan Account. Get

access to a number of exclusive mutual fund research reports and ability to

invest in Flexible Systematic Investment Plans. Or just download the PDF of

the application form and send it to the nearest Sharekhan ShareShop in your

city. Alternatively, just call up our toll-free customer care number, and we will

dispatch the application form.

30
Benefit from trading in Mutual Funds Online

Freedom from filling forms

Set up SIPs and Flexi-SIPs
Get access to the latest, free research reports with analysis of Mutual

Fund schemes.

V.PORTFOLIO MANAGEMENT SERVICES

Post sales services:

Detailed portfolio reports are available at timely basis like.

Investment Summary
Portfolio Holding
Transaction Statement
Bank Book
Realized/Unrealized Gain Loss Details
Fees Charged Statement (Debit Note)
Corporate Benefit (Bonus / Dividend / Right issues declared, etc.)
Fund Manager's Report
Dedicated Client Servicing Team to address your queries.

Why PMS?

1. Leave it to the Experts

31
Who's your Money Expert?

Your health, your accounts, your legal matters you have

professionals to manage the entire thing that are most important to you. Do

you have an expert to manage your hard-earned money?

Share khan Portfolio Management Services (PMS) use the expert

management skills of our independent Fund Managers, backed by the

expertise of 35 Financial Research Analysts, to get the best possible returns

for you.

2. Disciplined Approach

We are investing the funds and not just allocating to the sectors to

achieve decent growth of the corpus.

We diversify the portfolio to reduce the risk.
We would like to be in stocks with fewer burdens on Balance sheet and

good earning visibility.

3. Time is Money

Few Years ago you never imagined that you would have so much

money. And never imagined that you would have so little Time.
Success has extorted a fee from you: Time Leaving you very few hours

for all the things you think are important. Which is why at Sharekhan

Portfolio Management Services, we do not expect you to invest your

precious time.

4. Complete Transparency
32
 The third advantage of PMS is the transparent fee structure. With

transparent fees and AMC charges there are no hidden costs.

5. Structurally Better

Portfolio management services registered with SEBI are permitted to exit or

enter 100% at any time as long as they dont leverage and dont do intraday

trading.
The second big advantage of PMS services is that they can hold fewer

stocks and be more aggressive in their stance towards stocks or sectors.

The third advantage of PMS is the transparent fee structure. With flat fees

and AMC charges there are no hidden costs.

6. Risk Disclosure Document

Sharekhan Limited

PORTFOLIO MANAGEMENT SERVICES DISCLOSURE DOCUMENT

st
i. This Document has been updated up to 31 March, 2011 and has

been filed with the Securities and Exchange Board of India (SEBI)

along with the certificate in the prescribed format in terms of

Regulation 14 of the SEBI (Portfolio Managers) Regulations, 1993.

ii. The purpose of this Document is to provide essential information about

the portfolio services in a manner to assist and enable you in making

informed decision for engaging us as a Portfolio Manager.

iii. This document gives necessary information about us as Portfolio

Manager required by you as an investor before investing. You are

advised to read this document and retain this document for future
33
 reference.

iv. The name, phone number, e-mail address of the principal officer

designated by us as portfolio manager is as follows:

Name of the Shankar Vailaya

Phone number 022-61150000, 67481897
E-mail address ekhan.com; kunal@sharekhan.com

VI.COMMODITIES:

Convenience Redefined with Online Commodities Trading

With a Share khan online trading account, you can buy and sell

commodities in an instant! Anytime you like and from anywhere you like! Also,

Get access to cutting edge analysis, latest research reports and the most

relevant news on Commodities right in your trading terminal.

Benefit from Online Trading in Commodities

Freedom from Paperwork

Online orders on the phone
Instant credit and money Transfer
Timely advice and research reports
Trade from any net enabled PC
Information and Price alerts
After hour orders

VII.LEARN TO TRADE:

Share khan, your own guide to the financial jungle, in a step to boost

trader education has partnered with Online Trading Academy to provide

quality trader education.

34
 As our educational partner, Online Trading Academy will provide

professional education to traders who want to succeed in any market, and any

asset class. With 34 centers across the globe and growing, Online Trading

Academy is the world's most trusted name in professional trader education.

At Online Trading Academy, our constant endeavor is to provide

trader education for every need and experience level. We provide traders with:-

World-class learning experience

Highly skilled professional traders as mentors
Live Trading in our Professional Trader India course
Free retakes
Courses that pay for themselves

2.4 SHAREKHAN RESEARCH:

1. FUNDAMENTAL:

Stock Ideas: Aimed at investors. Presents our stock pick and discusses

reasons for the same. It comes with a price target and a time frame over which

gains can be materialized

Investors' Eye: A daily fundamental newsletter to help you take right

decisions.

Contents Views on most important news reports of the day

Recos using the bottom-up approach
Stock Update reports
Special reports
Other reports

35
Share khan Top Picks: A model portfolio comprising of 12 stocks for

investors with a horizon of more than a year. Portfolio is updated with new

stocks replacing existing stocks as and when required to optimize

performance.

View Point: Views on companies we don't track. Views on economy, policy

changes and government initiatives

Special Reports: Specialized reports on unique market opportunities.

Reports like - Selectivity pays monetary policy review, Hurricane gains,

Dividend yield stocks, etc.

IPO Flash: Report on forthcoming IPOs - only those IPOs which are covered

by our research team

Sector Reports: View on various sectors and its constituents (Eg. sugar and

Balrampur Chini, KCP Sugar Industries, Upper Ganges)

Market Outlook: Bi-monthly Fundamental view on the market.

2. TECHNICAL:

Punter Call: A daily view on how the market and major indices are

expected to trade for the day the closest support and resistance levels are

provided to help traders take decisions.

Calls created for tomorrow: These calls are for a one-day period and

are created today to buy in cash or futures. For selling tomorrow at the target

price. Buy with a stop loss or square off by 3.30pm the day after.
36
 Smart Charts: It presents the best positional trading calls in the

market. Each call is introduced along with a Reco (Go Long/Go Short), a price

target, a stop loss and a chart depicting the trend in the stock.

Derivative Calls: Toolkit for derivative traders.

3. MUTUAL FUND:

Mutual Fund Industry Update: This report provides all the latest news in the

industry like fund flows, investment trends, performance of various categories

of equity funds, performance in sector funds etc.

Top SIP Fund Picks: This report provides details on the SIP performances of

various funds across different categories for various time periods. Top SIP

fund picks are provided in Large-cap funds, Multi-cap funds, Mid-cap funds

and ELSS funds categories, after analyzing risk return parameters.

Top Equity Fund Picks: This report provides details of the Top Funds in

Large-cap funds, Mid-cap Funds, Multi-cap funds, balanced funds, thematic

funds, ELSS funds etc. Take an informed decision, depending on your risk

taking appetite, and stay ahead of the ups and downs of the market.

Top Debt Fund Picks: This report provides details of the Top Funds in

Monthly income plans, Income funds, Short-term debt funds, Ultra short

term funds, Floating rate funds, Liquid funds, Gilt funds etc.

4. COMMODITY:

Commodities Buzz: Daily newsletter on commodities fundamentals

37
Riveting Metals: Daily newsletter with Technical calls on metals

Eagle Eye (Commodities): Daily newsletter with technical calls on

commodities

CHAPTER III

REVIEW OF LITERATURE

3.1 According to Sahadevan, the Sagging Agricultural Commodity

Exchanges - Growth Constraints and Revival Policy Options: Commodity

derivatives have a crucial role to play in managing price risk especially in

agriculture dominated economies. However, they have been utilized in a very

limited scale in India. As long as prices of many commodities are restrained to

certain extent by Government intervention in production, supply and

distribution, forwards and futures markets for hedging rice risk in those

commodities have only limited practical relevance. A review of the nature of

institutional and policy level constraints facing this segment calls for more

focused and pragmatic approach from government, the regulator and the

exchanges for making the agricultural futures markets a vibrant segment for

risk management.

3.2 According to Peter Gibbon Danish Institute for International Studies,

Copenhagen. The commodity question: new thinking on old problems -

This paper reviews more and less mainstream policy options in relation to

the commodity question in the light both of its classical definition and of the

emerging concern about oligopoly. It begins by updating the evidence

concerning commodity price decline and volatility, and examining the

implications of these phenomena for macro-economic performance and

38
livelihoods in producing countries.

3.3 According to Stephen Craig,"The Self-Regulation of Commodity

Exchanges: The Case of Market Manipulation."-The paper deals with Price

dissemination that every Mandy becomes a monopoly to the local producers,

especially once they come to the market. Farmers typically face a short period

between the time that they harvest and the time that they can sell the crop.

3.4 According to Katherine Dusak, Futures Trading and Investor Returns:

An Investigation of Commodity Market Risk Premiums. The long-standing

controversy over whether speculators in a futures market earn a risk premium

is analyzed within the context of the capital asset pricing model recently

developed by harpe, Lintner, and others. Under that approach the risk

premium required on a futures contract should depend not on the variability

of prices but on the extent to which the variations in prices are systematically

related to variations in the return on total wealth. The systematic risk was

estimated for a sample of wheat, corn, and soybean futures contracts over the

period 1952 to 1967 and found to be close to zero in all three cases. Average

realized holding period returns on the contracts over the same period were

close to zero.

3.5 According to Susan Thomas, Agricultural commodity markets in India-

Policy issues for growth: Strengthening institutions in spot and derivative

markets for commodities is a necessary ingredient of the liberalization process

in agriculture, and can impact upon the lives of millions. n this paper, we

describe the existing market design prevalent on both the spot and the

futures markets. We show some evidence on the role played by the nascent

futures markets in price discovery. We document the problems of both the

39
spot and the futures markets. We offer three policy proposals: using reference

rates for strengthening transparency, exploring a greater role for cash

settlement, and treating warehouse receipts as securities.

3.6 According to N.Sathish Kumar, Asst. Professor & Head, Department of

Business Management. Vivekananda PG College, Karimnagar After almost

two years that commodity trading is finding favor with Indian investors and is

been seen as a separate asset class with good growth opportunities. For

diversification of portfolio beyond shares, fixed deposits and mutual funds,

commodity trading offers a good option for long-term investors and arbitrageurs

and speculators. And, now, with daily global volumes in commodity trading

touching three times that of equities, trading in commodities cannot be ignored

by Indian investors.

Online commodity exchanges need to revamp certain laws governing

futures in commodities to make the markets more attractive. The national multi-

commodity exchanges have unitedly proposed to the government that in view of

the growth of the commodities market, foreign institutional investors, too, should

be given the go-ahead to invest in commodity futures in India. Their entry will

deepen and broad base the commodity futures market. As a matter of fact,

derivative instruments, such as futures, can help India become a global trading

hub for select commodities.

Commodity trading in India is poised for a big take-off in India on the

back of factors like global economic recovery and increasing demand from China

for commodities. Considering the huge volatility witnessed in the equity markets

recently with the Sensex touching 6900 level commodities could add the required

zing to investors' portfolio. Therefore, it won't be long before the market sees the
40
emergence of a completely redefined set of retail investors.

3.7 According to Chua, Jess H., Gordon Sick, and Richard S. Woodward

(1990). "Diversifying with Gold Stocks" The authors extend Jaffes (1989)

study by examining the relative investment benefits of investing in gold equities

versus gold bullion during the period September 1971 through December 1988.

By splitting their sample period into two sub periods, the authors show that the

diversification benefits of gold bullion are much more consistent than the

diversification benefits of gold equities. In particular, they find that the beta of

gold equities more than doubled between the 1970s and 1980s, whereas the beta

of gold bullion remained largely unchanged at approximately zero in both periods.

Thus, the authors question the diversification benefits of gold equities,

particularly over short investment horizons.

3.8 According to de Roon, Frans A., Theo E. Nijman, and Chris Veld (2000).

"Hedging Pressure Effects in Futures Markets " Journal of Finance, We

present a simple model implying that futures risk premium depend on both own-

market and cross-market hedging pressures. Empirical evidence from 20 futures

markets, divided into four groups (financial, agricultural, mineral, and currency)

indicate that, after controlling for systematic risk, both the futures own hedging

pressure and cross-hedging pressures from within the group significantly affect

futures returns. These effects remain significant after controlling for a measure of

price pressure. Finally, we show that hedging pressure also contains explanatory

power for returns on the underlying asset, as predicted by the model. (p. 1437).

3.9 According to Dusak, Katherine (1973). "Futures Trading and Investor

Returns: An Investigation of Commodity Market Risk Premiums." Journal of

41
Political Economy, Vol. 81, No. 6 (November/December): 1387-1406. The long-

standing controversy over whether speculators in a futures market earn a risk

premium is analyzed within the context of the capital asset pricing model

recently developed by Sharpe, Linter, and others. Under that approach the risk

premium required on a futures contract should depend not on the variability of

prices but on the extent to which the variations in prices are systematically

related to variations in the return on total wealth. The systematic risk was

estimated for a sample of wheat, corn, and soybean futures contracts over the

period 1952 to 1967 and found to be close to zero in all three cases. Average

realized holding period returns on the contracts over the same period were close

to zero. (p. 1387)

3.10. According to Edwards, Franklin R., and Jimmy Liew (1999). "Managed

Commodity Futures" Journal of Futures Markets, Vol. 19, No. 4 (June): 377-

411. The authors examine the performance of managed commodity futures as

represented by public commodity funds, commodity pool operators, and

commodity trading advisers. The authors indicate that the costs associated with

investing in CPOs and CTAs may be quite large because the funds may incur

significant transaction costs, which are added to a number of fees charged to

investors, including management fees, profit-based incentive fees, and loads.

Despite these relatively high costs, the authors find that the net return to

commodity fund investments is frequently relatively attractive. Each individual

fund, however, has relatively volatile returns, so the stand-alone performance of

managed commodity futures is poor relative to traditional investments. The

authors find that, in general, adding a portfolio of CPOs or CTAs to a traditional

investment portfolio enhances portfolio performance. In addition, the authors

compare the returns to CTAs and CPOs with the returns to the passive
42
Reuters/Jefferies CRB Index and the MLM. The MLM is a dynamic index based

on momentum in commodity prices, which is consistent with the strategy

followed by many managed futures funds. The authors find a significant positive

relationship between the returns to managed futures and the MLM but no

significant relationship between managed funds and the CRB. This finding is

consistent with the contention that the MLM provides a general indicator of the

performance of managed futures. The authors also find, however, that neither the

MLM nor the CRB supplants managed futures in their derived efficient

portfolios.

CHAPTER IV

RESEARCH METHODOLOGY

The methodology of research indicates the general pattern of organizing

the procedure of gathering valid and reliable data for the problem under

43
investigations (Kothari, 1996). The methodology of this study includes the choice

of the research approach, sampling technique, development of the tool, data

collection procedure and method of analysis based on the statement and

objectives of the study.

Research approach

The selection of the research approach is the basic procedure for the

conduct of research. A research approach tells the investigator as to what data to

collect and how to analyze it. It also suggests possible conclusion to be drawn

from the data.

The research approach refers to the investigator overall plan for

obtaining answers to the research question and for testing the research

hypothesis. It spells out the strategies that the investigator adopts to develop

information that is accurate, objective and interpretable. It is set of flexible guide

spots designed to keep the investigator in the right direction. ( Polit and Hungler,

1999).

4.1 OBJECTIVES OF THE STUDY

To study about the investors preferences towards commodity market in

Share khan Financial Services Pvt. Ltd, Gobi.

To find out very high preference of commodity market.

To analyze the various factors influencing investors preference on

commodity market.

To find out the investors awareness regarding commodity market.

44
 To study about the investors acceptance level of rumors in commodity

market.

To find some suggested measures to improve the present level.

4.2 SCOPE OF THE STUDY

It assesses the preference of choosing the market by the respondents.

The study helps us to know about the Investors preferences towards

commodity market.

It helped to bring out various investment opportunities and preference in

commodity market.

The specific reason to why people preference commodity market one

mode of investment and earning high return

4.3 RESEARCH DESIGN

Research design constitutes the blue print for the collection and

analysis of the data. Research design is essential as it facilitates the smooth

sailing of various research operations so as to make the research as efficient

as possible yielding maximum information with minimum of effort, time, and

money.

"Decisions regarding what, when, how, how much by what means

concerning a research constitutes the research design. --C.R. Kothari

DESCRIPTIVE RESEARCH:

Descriptive Research includes surveys and fact - finding enquiries

of different kinds of the major purpose of descriptive research is description of

45
the state of affairs as it exists at present. In social science and business

research we quite often use the term ex post facto research for description

research studies.

SAMPLING UNIT

Business Men, Professionals, Employed personnel, others like House

wife etc.

SAMPLE SIZE

A sample size of 120 investors was selected for the study in the Gobi

Region.

METHOD OF DATA COLLECTION

Here the researcher mainly used primary data.

A. PRIMARY DATA

Data are collected for the first time for a specific purpose in mind
using the questionnaire method and interview method.

B. SECONDARY DATA

The secondary data was collected from the company Journals,

Reports, Magazines, Internet and Materials obtained from the commodity

product in the regional Office.

4.4 SAMPLING TECHNIQUE

46
 This sampling method involves purposive or deliberate selection of

particular units of the universe for consulting a sample, which represents the

universe.

Non Probability- Convenience Sampling:

When population elements are selected for inclusion in the sample

based on the ease of access it can be called convenience sampling

4.5 TOOLS FOR ANALYSIS

1. Simple No. of Respondents in (%) analysis

2. Chi-Square Test

3. Correlation Analysis

4. Weighted Average

5. ANOVA

1. SIMPLE NO.OF RESPONDENTS IN (%) ANALYSIS

No. of Respondents in (%) analysis is a simple and effective method

used for analyzing collect data. It provides clear distribution of respondents

responses. Using this method we can get clear view of how customer

respondents to a specific query distributed among different options.

No. of Respondents in (%) = (Number of Respondent/ Total Respondents)

X 100

2. CHI-SQUARE TEST

47
 The chi-square test is an important test amongst the several tests of

significant'. Chi- Square, symbolically written as (Pronounced as Ki -

Square), is a statistical measure used in the context of sampling analysis for

comparing a variance to a theoretical variance.

It can also be used to make comparisons between theoretical

populations and actual data when categories are used. Thus, the chi-square

test is applicable in large number of problems. The tests is, in fact, a

technique through the use of which it is possible for all researchers to

(i) Test the goodness of fit;

(ii)Test the significant of association between two attributes, and

(iii) Test the homogeneity or the significance of population variance.

= (Oij- Eij) / Eij

Where,

Oij = Observed frequency of the cell in ith row and jth column.

Eij = Expected frequency of the cell in ith row and jth column.

3. CORRELATION ANALYSIS:

It is helps to determine the strength of linear between the two

variables X &Y. In other words as to how strongly are these two variables

correlated. Karl Pearson, in 1986 developed and index or co-efficient of these

association in case where the relationship is a linear one. i.e. where the trend

48
of the relationship can be described by a straight line.

N dx dy ( dx) ( dy)

r = ------------------------------------------

Ndx - ( dx) N dy - ( dy)

4. WEIGHTED AVERAGE:

Weighted average may be defined as the average obtained multiplying

the various item in serious by certain values know as weighted and the total of

products so obtained is dividend by the total of weighted.

Weighted Average = ( XW/ W)

Where,

W- No. of Respondents favoring in the opinion

X- Value of the score to the option.

5. ANOVA:

Analysis of variance (Abbreviated as ANOVA) is an extremely useful

technique concerning researches in the field of economics, biology, education,

psychology, sociology, business/industry in researches of several other

disciplines. This technique is used here since multiple sample cases are

involved.

The significance of the difference between the means of two samples

can be judged through either Z-test or T- Test but the difficulties arise when we

happen to examine the significance of the difference amongst more than two

sample means at the same time.

49
 The ANOVA techniques enable us to perform this simultaneous test

and as such are considered to be an important tool of analysis in the hands of a

researcher. Using this technique, one can draw inferences about whether the

samples have been drawn from populations having the same mean.

The essence of ANOVA is that the total amount of variation in set of

data is broken down into two types, that amount which can be attributed to

chance and that amount which can be attributed to specific causes.

The technique involves the following steps:

1. The Correlation factor (C.F) = (T) / N

Where,

T = Grand Total

N = No. Of observation

2. Total SS - (SS between Columns + SS Between rows)

= SS for residual or error Variance

3. Degree of freedom (d.f.) can be worked out under:

d.f. for total variance ( c. r -1)

d.f.for variance between columns = (c1)

d.f. for variance between rows = (r1)

d.f. for residual variance = (c1)(r1)

Where,

c = Number of columns

r = Number of rows

4. ANOVA table can be setup in the usual fashion as shown below:

50
 Degree of Mean
Source of Sum of square
freedom Square F-ratio
variation SS (d.f) (ms)

SS
Between Between MS between
( ( Tj ) / nj )- ( c-1 )
columns Columns Columns /
(T)/n)) / MS residual
treatment
( c-1 )

SS
Between MS between
( ( Ti ) / ni )- (r1) Between
Rows rows / MS
rows /
(T)/n)) residual
treatment
(r1)

SS
Total SS ( SS (c1) Residual
Residual or between /( c 1 )
(r1)
Error columns + SS
(r1)
between Rows )

Total xij-((T)/n)) ( c. r -1)

4.6 LIMITATIONS OF THE STUDY

Though at most care was taken to do the research articulately, it is liable to

certain limitations viz.

The survey was limited to Gobi only.

51
 The respondents were less interested in answering the questionnaire, as

they felt that it was an interruption to their regular work.

All respondents were not very much open in giving their details.

Limited time period of the study.

Difficulties to see the investors, since most of the investors were trading in

their home itself.

4.7 CHAPTER SCHEME:

The whole study has been divided into five chapters as detailed below:

The first chapter provides an idea about the investors preference of

commodity market.

The second chapter deals the overview about the industry profile and,

company profile.

The third chapter devoted to literature survey. The researcher attempted an

exhaustive review of literature relating to the field of study and has

analyzed the various studies which focused on the investors preference of

commodity market.

The fourth chapter deals with research methodology adopted in the study.

In this chapter, the objectives set for the study, data collection sources,

data collection tools, limitation of the study and chapter of schemes are

explained.

The fifth chapter deals with analysis and interpretation of data are

undertaken, the analysis and interpretation have been supplemented and

strengthened with appropriate tables. A systematic and scientific analysis

52
 of data has been made using different types of financial and statistical

tools.

The sixth chapter brings out a comprehensive list of various findings of the

study. The systematic way of analysis and interpretation of data has

resulted in arriving at logical findings and on the basis of finding of the

study; the researcher has come out with certain practical suggestions and

conclusion. In this chapter, the researcher also has outlined the directions

for further research which could be undertaken by future researchers in

this area of study.

53
 CHAPTER V

ANALYSIS AND INTERPRETATION

1. SIMPLE NO.OF RESPONDENTS IN PERCENTAGE ANALYSIS

Table No 5.1: The table showing the Age Group of the Respondents

S.No Age group No. of No. of Respondents

Respondents in (%)
1 Below 25 yrs 19 15.8
2 25-50 yrs 41 34.2
3 50-75 yrs 52 43.3
4 Above75 yrs 8 6.7
Total 120 100
Inference:

From the above table, it is clear that 15.8% of the respondents are

belongs to the age below 25yrs, 34.2% of the respondents are belongs the age

between 25 years to 50 years.43.3% of the respondents are belonging the age

between 50 years to 75 years. 6.7% of the respondents are belongs to above

75yrs of age group. Hence, the investors belongs the age between 50 to 75

years are major investors in the market.

Chart No 5.1: Age Group of the Respondents

54
 Table No 5.2: The table showing occupation of the Respondents

No. of No. of Respondents

S.No Occupation
Respondents in (%)

1 Business 33 27.5

2 Profession 46 38.33

3 Employed 27 22.5

4 Others 14 11.66

Total 120 100

Inference:

From the above table, it is reveals that 27.5% of the respondents are

Businessmen, 38.3% of the respondents are professional, 22.5% of the

respondents are Employed & 11.6% of the respondents are private others.

Hence, most of the respondents are professionals.

Chart No: 5.2 The chart showing occupation of the Respondents

55
 Table No. : 5.3 The table showing Gender of the Respondents

No. of No. of Respondents

S.No Occupation
Respondents in (%)

1 Male 92 76.7

2 Female 28 23.3

Total 120 100

Inference:

From the above table, it is notified that 76.7% of the respondents are

Male and 23.3% of the respondents are Female.

Chart No: 5.3: The chart showing Gender of the Respondents

56
 Table No.5.4: The table showing Educational Qualifications of the

Respondents

Educational No. of No. of Respondents

S.No
Qualifications Respondents in (%)

1 Up to 12th 20 16.7

2 UG 48 40

3 PG 38 31.7

4 Others 14 11.7

Total 120 100

Inference:

57
 From the above table, it is shows that 16.7% of the respondents are

in the category of up to 12th, 40% of the respondents Educational

qualifications are UG, 31.7% of the respondents are belongs to PG and 11.7%

of the respondents Educational qualifications are others. Hence, majority of

the respondents are falls in UG.

Chart No. 5.4: The chart showing Educational Qualifications of the

Respondents

Table No.5.5: The table showing Annual Income of the Respondents

No. of No.of Respondents

S.No Annual Income
Respondents in (%)

1 Below 2 Lakhs 40 33.3

2 2 Lakhs -4 Lakhs 28 23.3

3 4 Lakhs-6 Lakhs 23 19.2

4 Above 6 Lakhs 29 24.2

Total 120 100

58
Inference:

From the above table, it is inferred that 33% of the respondents

Annual income is Below 2 Lakhs, 23.3% of the respondents Annual income is

2 Lakhs - 4 Lakhs, 19.2% of the respondents Annual income is 4 laks-6 lakhs

and 24.2% of the respondents are belongs to above 6 Lakhs. Hence, most of

the respondents annual income falls in below 2 lakhs.

Chart No: 5.5 : The chart showing Annual Income of the Respondents

Table No.5.6: The table showing Investment Objectives of the

Respondents

No. of No.of Respondents

S.No Investment Objectives
Respondents in (%)

1 High income 77 64.1

Reasonable income for

2 35 29.1
safety

3 For Retirement welfare 8 6.7

59
 4 Tax benefit 0 0

Total 120 100

Inference:

From the above table, it is identified that 64.16% of the respondents

investment objective is to earn high Income, 29.16% of the respondents aim

is as reasonable income for safety. 6.66% of the respondents objective is to for

retirement benefit and 0% of the respondents objective is to for tax Benefits.

Hence, Most of the investors are aims at earning the high income.

Chart No.5.6: The chart showing Investment Objectives of the

Respondents

Table No.5.7: The table showing Investment portion of the Respondents

income

No. of No. of Respondents

S.No Investment portion
Respondents in (%)
1 Below 25% 37 30.83
2 25% -50% 43 35.83
3 50%-75% 35 29.16
60
 4 Above 75% 5 4.16
Total 120 100
Inference:

From the above table, it is find that 30.83% of the respondents

investment portion of income is below 25%. 35.83% of the respondents

investment portion of income is between 25%-50%, 29.16% of the

respondents investment portion of income is between 50%-75%, and 4.16% of

the respondents investment portion of income is above 4%. Hence, majority of

the respondents investment portion are in between 25 to 50%.

Chart No.5.7: The chart showing Investment portion of the Respondents

income

Table No.5.8: The table showing Risk taking capacity of the Respondents

No. of No. of Respondents

S.No Risk taking capacity
Respondents in (%)
1 Very high 20 16.66
2 High 24 20
61
 3 Medium 26 21.66
4 Low 26 21.66
5 Very low 24 20
Total 120 100

Inference:

From the above table, it is clearly shows that 16.67% of the

respondents risk taking capacity is very high, 20% of the respondents risk

taking capacity is high, 21.66% of the respondents risk taking capacity is

Medium, 21.66% of the respondents risk taking capacity is low and 20% of

the respondents risk taking capacity is very low. Hence, majority of the

respondents are willing to take medium risk in their investment.

Chart No.5.8: The chart showing Risk taking capacity of the

Respondents

Table No.5.9: The table showing Current Investment of the Respondents

S.No Current Investment No. of No. of Respondents

62
 Respondents in (%)
1 Below 1 lakhs 59 49.16
2 1 Lakhs -2 Lakhs 33 27.5
3 2 Lakhs -3 Lakhs 17 14.16
4 Above 3 Lakhs 11 9.16
Total 120 100

Inference:

From the above table, it is reveals that 49.16% of the respondents

current investment amount is below 1 Lakhs.27.5% of the respondents

current investment amount is between 1 Lakhs -2 Lakhs, 14.16% of the

respondents current investment amount is between 2 Lakhs -3 Lakhs, and

9.16% of the respondents current investment amount is above 3 Lakhs.

Hence, most of the respondents (59) investment amount falls below 1 lakhs.

Chart No.5.9: The chart showing Current Investment of the Respondents

Table No.5.10: The table showing Investment advice of the Respondents

S.No Investment advice No. of No. of Respondents

63
 Respondents in (%)

1 Friends 59 49.16

2 Family 21 17.5

3 Consultants 9 7.5

4 others 31 25.83

Total 120 100

Inference:

From the above table, it shows that 49.16% of the respondents are

getting investment advice from their friends.17.5% of the respondents are

getting investment advice from their family, 7.5% of the respondents are

getting investment advice from their consultants and 25.83% of the

respondents are getting investment advice from their others. Hence, It is

found that majority of the respondents are advised by their friends.

Chart No.5.10: The chart showing Investment advice of the Respondents

64
Table No.5.11: The table showing Various Investment preferences of the

Respondents

No. of No. of Respondents

S.No Investment avenues
Respondents in (%)
1 Share 52 43.33

2 Mutual funds 26 21.66

3 Commodity market 32 26.66

4 Other savings 10 8.33

Total 120 100

Inference:

From the above table, it is noted that 43.33% of the respondents are

prefer shares, 21.66% of the respondents are like to invest in mutual

investments ,26.66% of the respondents are preferring commodity market

investment avenues, and 8.33% of the respondents are like to invest only in

other savings like insurance , saving deposits.. Hence, we can understand

that majority of the respondents are interested to invest in shares only.

Chart No.5.11: The chart showing Various Investment preferences of the

Respondents

65
 Table No.5.12: The table showing Source of know about the commodity

market of the Respondents

Source of know about the

No. of No. of Respondents
S.No commodity market of the
Respondents in (%)
Respondents
1 Friends 59 49.16
2 Dealers 5 4.166
3 Mass media 25 20.83
4 Officials of investment org. 23 19.16
Total 120 100
Inference:

From the above table, it is inferred that 49.16% of the respondents

are getting know about commodity market through friends, 4.16% of the

respondents are knowing through dealers, 20.83% of the respondents are

getting know about commodity market through mass medias, and 19.16% of

the respondents are came to know about commodity market through officials

of investment organizations. Hence, its clearly understood that most of the

66
respondents are came to know about commodity market through their

friends.

Chart No.5.12: The chart showing Source of know about the commodity

market of the Respondents

Table No.5.13: The table showing Experience of the Respondents in

commodity Trading

Experience in No. of No. of Respondents

S.No
commodity market Respondents in (%)
1 Below 1 year 18 15
2 1-2 years 42 35
3 2-3 ears 23 19.16
4 More than 3 years 37 30.83
Total 120 100
Inference:

From the above table, it is clearly indentified that 15% of the

respondents are trading in commodity market below 1 year, 35% of the

respondents are experienced between 1-2 years, 19.16% of the respondents

are trading between 2-3 years and 30.83% of the respondents are experienced

67
in commodity market more than 3 years. Hence, Its concluded that majority

of the respondents are experienced in commodity market below 1-2 years.

Chart No.5.13: The chart showing Experience of the Respondents in

commodity Trading

Table No.5.14: The table showing the Frequency of Trading in

commodity market of the respondents

Frequency of No. of No. of Respondents

S.No
Trading Respondents in (%)
1 Daily 103 85.83
2 Weekly 7 5.83
3 Monthly 3 2.5
4 Every season 2 1.66
5 Occasionally 3 2.5
6 Rarely 2 1.66
Total 120 100
Inference:

From the above table, it is clear that 85.83% of the respondents are

trading in commodity market in daily basis, 5.83% of the respondents

68
frequency of trading falls in weekly basis, 2.5% of the respondents are trading

in monthly basis, 1.66% of the respondents are trading in commodity market

in every seasons, 2.5% of the respondents trading frequency is in occasional

basis, and 1.66% of the respondents are trading in commodity market in

rarely. Hence, its reveals that most of the investors are trading in commodity

market in daily basis.

Chart No.5.14: The chart showing Frequency of Trading in commodity

market of the respondents

Table No.5.15: The table showing Awareness level of commodity market

regulations and its circular

Experience in No. of No.of Respondents

S.No
commodity market Respondents in (%)
1 Very high 70 58.33
2 High 30 25
3 Medium 10 8.33
4 low 7 5.83
5 Very low 3 2.5
Total 120 100

69
Inference:

From the above table, it is inferred that 58.33% of the respondents

awareness level of markets regulations and its circulars is very high, 25% of

the respondents awareness level falls in high, 8.33% of the respondents are

moderately aware about markets regulations and its circulars, 5.83% of the

respondents are having low level awareness of markets regulations and its

circulars, and 2.5% of the respondents are not aware of markets regulations

and its circulars. Hence, its concluded that out of the sample most of the

respondents awareness level falls in the very high category.

Chart No.5.15: The chart showing Awareness level of commodity market

regulations and its circular

Table No.5.16: The table showing Reason for Choosing Commodity

Market of the Respondents

Reason for Choosing No. of No. of Respondents

S.No
Commodity Respondents in (%)
1 High return 82 68.33
2 Moderate return 4 3.33
3 Safe return 4 3.33
4 Low Margin 30 25

70
 Total 120 100
Inference:

From the above table, it is found that 68.33% of the respondents are

choosing the commodity market for getting High return, 3.33% of the

respondents reason for choosing commodity market is moderate return,

3.33% of the respondents are prefer to choose the commodity market is for

earning safety return, and 25% of the respondents reason for choosing

commodity market falls in low Margin. Hence, Its inferred that majority of the

respondents are likely to choose the commodity market for getting high return.

Chart No.5.16: The chart showing Reasons for Choosing Commodity

Market of the Respondents

Table No.5.17: The table showing Investors preference of commodity

market of the respondents

Types of Very Hig Mediu very

% % % low % %
commodities High h m Low
Plantation
11.6 28.3
Products: 17 14.16 15 12.5 14 34 40 33.33
6 3
Rubber,
Spices: 17 14.16 20 16.6 18 15 32 26.6 33 27.5
Pepper, 6 6

71
 Turmeric,
Jeera,
chilli,
coriander
Pulses: 16.6 19.1 36.6
18 15 20 23 44 15 12.5
Chana 6 6 6
Fibres:
V-797 kapas , 26 21.66 12 10 27 22.5 30 25 25 20.83
shankar kapas
Cereals:
20.8 25.8
Wheat, 23 19.16 15 12.5 25 31 26 21.66
3 3
Barley,
Oil and Oil seeds: 26.6
22 18.33 15 12.5 21 17.5 32 30 25
Castor seeds, 6
Others:
11.6 18.3
Guar Seeds, 15 12.5 14 22 33 27.5 36 30
6 3
Guar Gum,
Metals:
Steel, 26.6 9.16 13.3
50 41.66 32 11 16 11 9.166
Copper, 6 6 3
Zinc,
Energy:
16.6 16.6
Crude Oil, 52 43.33 20 15 12.5 20 13 10.83
6 6
Thermal Coal,
Precious Metals:
Gold,
Gold (100 gms),
Gold International, 15.8
60 50 19 11 9.16 15 12.5 15 12.5
Silver, 3
Silver (5kg),
Silver International,
Platinum
Others:
33.3
CER, 2 1.66 0 0 15 12.5 40 63 52.5
3
Polyvinyl Chloride

Inference:

From the above table its clearly found that

72
 33.3% of the respondents are not ready to prefer the plantation products,

Majority of the respondents i.e. 75.5% of the respondents are prefer only

low level of spices products,

36.7% of the respondents are likely to prefer only low level of pulses

products,

25 % of the respondents preference falls in low level of Fibers products,

25.8% of the respondents are prefer low level of cereals products,

26.7% of the respondents are prefer low level of oil seeds products and

30% of the respondents are not prefer other foods products,

41% of the respondents are very highly given their preference is metal

products like steel, copper, etc.

43% of the respondents are very highly preferred the Energy products like

crude oil, natural gas etc.

50% of the respondent s preference falls in the Precious products like gold,

33.3% of the respondents are not prefer other metal products like polyvinyl,

Hence, from the above consolidated table it shows that majority of the

investors preference is metal, energy and precious metals.

73
74
Chart No.5.17: The chart showing Investors preference of commodity

market of the respondents

75
 Specialty of No. of No. of Respondents
S.No
commodity market Respondents in (%)
1 Price hedging 51 42.5
2 Regulated marketing 39 32.5
3 Low risk 20 16.66
4 Quality products 10 8.33
Total 120 100
Inference:

From the above table, it is clearly notify that 42.5% of the

respondents are saying the specialty of the commodity trading are price

hedging, 32.5% of the respondents are saying the specialty of the commodity

trading are regulated market, 16.66% of the respondents opinion about

specialty of trading are low risk, and 8.33% of the respondents given their

opinion about the specialty of the commodity trading are quality products.

Hence, form the above table its clearly reveals that most of the respondents

i.e., (51) are given their opinion about the specialty of this market is price

hedging.

Chart No.5.18: The chart showing Opinion of the respondents about the

specialty of trading in commodity market

76
Table No.5.19: The table showing Level of acceptance of the respondents about

luring advertisement, rumors etc.

Level of acceptance of
No. of No.of Respondents
S.No luring advertisement,
Respondents in (%)
rumors etc
1 Very high 81 67.5
2 High 25 20.83
3 Medium 12 10
4 Low 1 0.83
5 Very low 1 0.83
Total 120 100
Inference:

From the above table, it is found that 67.5% of the respondents level of

acceptance about rumors and luring advertisements is very high, 20.83% of the

respondents are highly accepting about rumors and luring advertisements, 10% of

the respondents level of acceptance about rumors and luring advertisements falls in

medium, 0.83% of the respondents are having very low level of acceptance about

rumors and luring advertisements, and 0.83% of the respondents are not accepting

the rumors and luring advertisements. Hence, Its concluded that majority of the

investors are very highly accepting the rumors & luring advertisements.

Chart No.5.19: The chart showing Level of acceptance of the respondents about

luring advertisement, rumors etc

77
 Table No.5.20: The table showing Respondents recommendation of

others entering into the commodity market

Respondents
No. of No. of Respondents
S.No recommendation to
Respondents in (%)
others
1 Definitely 75 62.5
2 Probably 33 27.5
3 Not sure 12 10
4 Never 0 0
Total 120 100
Inference:

From the above table, it is indentified that 62.5% of the respondents

are recommends others enter into the commodity, 27.5 % of the respondents

are probably recommends others enter into commodity market, and 10% of

the respondents are saying not sure to other entering into the commodity

market. Hence, from the above table its clearly understood that out of the

total sample most of the respondents i.e. 75 of them are definitely

recommending others to enter into the market.

78
 Chart No.5.20: The chart showing Respondents recommendation of

others entering into the commodity market

2. CHI-SQUARE ANALAYSIS

Table No.5.21: The table showing Relationship between Annual Income

and Pulses

79
 Income * Pulses Cross tabulation

Pulses
Total
1 2 3 4 5

Count 4 6 8 14 8 40

Below two lakhs Expected

6.0 6.7 7.7 14.7 5.0 40.0
Count

Count 8 5 3 11 1 28
Two Lakhs -
Four Lakhs Expected
4.2 4.7 5.4 10.3 3.5 28.0
Inco Count

me Count 4 6 4 7 2 23
Four Lakhs -
Six Lakhs Expected
3.4 3.8 4.4 8.4 2.9 23.0
Count

Count 2 3 8 12 4 29

Above Six Lakhs Expected

4.4 4.8 5.6 10.6 3.6 29.0
Count

Count 18 20 23 44 15 120

Total Expected
18.0 20.0 23.0 44.0 15.0 120.0
Count

Step1 : Null Hypothesis (H0): There is no significant relationship between

Annual Income and Pulses.

Step2 : Alternate Hypothesis (H1): There is significant relationship between

Annual Income and Pulses.

80
Step 3 : calculation of chi-square = (Oij- Eij) / Eij

Table No.22: calculation of chi-square

Oij-
S.No Oij Eij (Oij-Eij) (Oij-Eij)/Eij
Eij

1 4 6 -2 4 0.6666

2 6 6.67 -0.67 0.4489 0.06730

3 8 7.67 0.33 0.1089 0.01419

4 14 14.67 -0.67 0.4489 0.03059

5 8 5 3 9 1.8

6 8 4.2 3.8 14.44 3.4380

7 5 4.67 0.33 0.1089 0.0233

8 3 5.37 -2.37 5.6169 1.0459

9 11 10.26 0.74 0.5476 0.0533

10 1 3.5 -2.5 6.25 1.7857

11 4 3.45 0.55 0.3025 0.0876

12 6 3.83 2.17 4.7089 1.2294

13 4 4.4 -0.4 0.16 0.0363

14 7 8.43 -1.43 2.0449 0.2425

15 2 2.85 -0.85 0.7225 0.2535

16 2 4.35 -2.35 5.5225 1.2695

17 3 4.83 -1.83 3.3489 0.6933

18 8 5.56 2.44 5.9536 1.0707

19 12 10.63 1.37 1.8769 0.1765

81
 20 4 3.63 0.37 0.1369 0.0377

Chi square( = (Oij- Eij) / Eij ) 14.0228

Step4 : Therefore, the Degree of freedom in this case

= (r-1) (c-1)

= 12

Step5 : Conclusion:

The table value of for 12 degree of freedom at 5% level of

significance is 21.000. The calculated value is much less than the

tabulated value and hence the result of the experiment supports the

hypothesis. We can, thus, conclude that there is no influencing of income to

prefer the pulses. (Null Hypothesis Accepted)

Table No.5.23: The table showing Relationship between Annual Income

and Fibres

82
 Income * Fibers Cross tabulation

Fibres
Total
1 2 3 4 5

Count 8 5 8 10 9 40

Below two lakhs Expected

8.7 4.0 9.0 10.0 8.3 40.0
Count

Count 10 3 4 6 5 28
Two Lakhs -
Four Lakhs Expected
6.1 2.8 6.3 7.0 5.8 28.0
Incom Count

e Count 3 3 6 6 5 23
Four Lakhs -
Six Lakhs Expected
5.0 2.3 5.2 5.8 4.8 23.0
Count

Count 5 1 9 8 6 29
Above Six
Lakhs Expected
6.3 2.9 6.5 7.2 6.0 29.0
Count

Count 26 12 27 30 25 120

Total Expected
26.0 12.0 27.0 30.0 25.0 120.0
Count

Step1 : Null Hypothesis (H0): There is no significant relationship between

Annual Income and Fibers.

Step2 : Alternate Hypothesis (H1): There is significant relationship between

Annual Fibers.

Step 3: calculation of chi-square = (Oij- Eij) / Eij

83
 Table No.5.24: calculation of chi-square

S.No Oij Eij Oij-Eij (Oij-Eij) (Oij-Eij)/Eij

1 8 8.7 -0.7 0.49 0.0563
2 5 4 1 1 0.25
3 8 9 -1 1 0.1111
4 10 10 0 0 0
5 9 8.3 0.7 0.49 0.0590
6 10 6.1 3.9 15.21 2.4934
7 3 2.8 0.2 0.04 0.0142
8 4 6.3 -2.3 5.29 0.8396
9 6 7 -1 1 0.1428
10 5 5.8 -0.8 0.64 0.1103
11 3 5 -2 4 0.8
12 3 2.3 0.7 0.49 0.2130
13 6 5.2 0.8 0.64 0.1230
14 6 5.8 0.2 0.04 0.0068
15 5 4.8 0.2 0.04 0.0083
16 5 6.3 -1.3 1.69 0.2682
17 1 2.9 -1.9 3.61 1.2448
18 9 6.5 2.5 6.25 0.9615
19 8 7.2 0.8 0.64 0.0888
20 6 6 0 0 0
Chi square( = (Oij- Eij) / Eij ) 7.7919

Step4 : Therefore, the Degree of freedom in this case = (r-1) (c-1) = 12

Step5 : Conclusion:

The table value of for 12 degree of freedom at 5% level of

significance is 21.000. The calculated value is much less than the

84
tabulated value and hence the result of the experiment supports the

hypothesis. We can, thus, conclude that there is no influencing of income to

prefer the fibers. (Null Hypothesis Accepted).

Table No.5.25: The table showing Relationship between Annual Income

and Energy
85
 Occupation * Energy Cross tabulation
Energy
Total
1 2 3 4 5
Count 13 3 4 8 5 33
Business Expected
14.3 5.5 4.1 5.5 3.6 33.0
Count
Count 22 10 6 3 5 46
Professio
Expected
n 19.9 7.7 5.8 7.7 5.0 46.0
Occupati Count
on Count 15 3 3 4 2 27
Employe
Expected
d 11.7 4.5 3.4 4.5 2.9 27.0
Count
Count 2 4 2 5 1 14
Others Expected
6.1 2.3 1.8 2.3 1.5 14.0
Count
Count 52 20 15 20 13 120
Total Expected
52.0 20.0 15.0 20.0 13.0 120.0
Count

Step1 : Null Hypothesis (H0): There is no significant relationship

between Annual Income and Energy.

Step2 : Alternate Hypothesis (H1): There is significant relationship

between Annual Energy.

Step 3: calculation of chi-square = (Oij- Eij) / Eij

Table No.5.26: calculation of chi-square

S.No Oij Eij Oij-Eij (Oij-Eij) (Oij-Eij)/Eij

86
 1 13 14.3 -1.3 1.69 0.1181

2 3 5.5 -2.5 6.25 1.1363

3 4 4.125 -0.125 0.0156 0.0037

4 8 5.5 2.5 6.25 1.1363

5 5 3.575 1.425 2.0306 0.5680

6 22 19.93 2.0667 4.2712 0.2142

7 10 7.667 2.3334 5.44475 0.7101

8 6 5.75 0.25 0.0625 0.0108

9 3 7.667 -4.6666 21.7771 2.8405

10 5 4.983 0.0167 0.0002 5.5964

11 15 11.7 3.3 10.89 0.9307

12 3 4.5 -1.5 2.25 0.5

13 3 3.375 -0.375 0.1406 0.0416

14 4 4.5 -0.5 0.25 0.0555

15 2 2.925 -0.925 0.8556 0.2925

16 2 6.067 -4.0666 16.5372 2.7259

17 4 2.333 1.6667 2.7778 1.1905

18 2 1.75 0.25 0.0625 0.0357

19 5 2.333 2.6667 7.1112 3.0477

20 1 1.517 -0.5166 0.2668 0.1759

Chi square( = (Oij- Eij) / Eij ) 15.7354

Step4 : Therefore, the Degree of freedom in this case

87
 = (r-1) (c-1) = (4-1) (5-1) = 12

Step5 : Conclusion:

The table value of for 12 degree of freedom at 5% level of

significance is 21.000. The calculated value is much less than the

tabulated value and hence the result of the experiment supports the

hypothesis. We can, thus, conclude that there is no influencing of Occupation

to prefer the Energy. (Null Hypothesis Accepted).

88
 3. ANNOVA

Table No.5.27: The table showing Relationship between Occupation and

Metals

Occupation * Metals Cross tabulation

Metals
Total
1 2 3 4 5

Business 13 7 5 6 2 33

Professio
21 16 2 2 5 46
Occupati n

on Employe
13 5 1 4 4 27
d

Others 3 4 3 4 0 14

Total 50 32 11 16 11 120

Step 1 : Null Hypothesis (Ho): There is no significant relationship between

occupation and Preference of the Metal Commodity.

Step 2 : Alternative Hypothesis (H1): There is significant difference

between occupation and Metal Commodity Preference.

Step3 : T=120, n=20, Therefore,

Correction factor = (T) / n = 120/20 = 720

89
Step4 : Total SS

=169+49+25+36+4+441+256+4+4+25+169+25+1+16+16+9+16+9+9

= 570

Step 5 : SS between Columns Treatment:

= (50/4) + (32/4) + (11/4) + (16/4) + (11/4) - 720 (correction Factor)

= 285.5

Step 6 : SS between Rows Treatment:

= (33/5) + (46/5) + (27/5) + (14/5) - 720 (correction Factor)

= 106

Step 7: SS Residual or Error = Total SS (SS B/w Columns + SS B/w

Rows)

= 570 (285.5 + 106)

= 178.5

Step 8: Calculation of Anova

Table No.5.28: The Anova Table

5% F-Limit
Source of (or the
SS d.f MS F- ratio
variation table
values)
90
 Between
= ( c-1 ) =
columns
= 285.5 / 4 71.375 / F ( 4 , 12 )
(i.e. 285.5 = ( 5 1 ) 14.875
= 71.375 = 5.9117
between =4 = 4.7983
occupation)

Between
Rows
=(r1) =
(i.e. = 106 / 3 35.3333 F ( 3 , 12 )
between 106 =(41) / 14.875
= 35.3333 = 8.7446
Metal =3 = 2.3753
Preference
level )

=(c1) = 178.5 /
(r1) 12
Residual or
178.5
Error =4x3 = 14.875

= 12

(4 x 3 ) 1 =
Total 570
11

Inference:

It is noted from the above table that, the calculated ANOVA value is

less than the table value. So, there is no relationship between Occupation and

Metal preference. (Null hypothesis accepted.)

91
 Table No.5.29: The table showing Relationship between Risk Taking

Capacity and Age Group

Risk Taking * Age Cross tabulation

Age

Below 25 25-50 50-75 Above 75 Total

yrs yrs yrs yrs

Very
0 19 1 0 20
high

High 0 1 23 0 24
Risk
taking Medium 19 5 2 0 26

Low 0 6 20 0 26

Very low 0 10 6 8 24

Total 19 41 52 8 120

Step 1 : Null Hypothesis (Ho):

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There is no significant relationship between Risk Taking Capacity and age

Group for investing in commodity market.

Step 2: Alternative Hypothesis (H1):

There is significant difference between Risk Taking Capacity and Age Group

for investing in commodity market.

Step3 : T=120, n=20, Therefore, Correction factor = (T) / n = 120/20 =

720

Step4 :

Total SS = 0 + 1 + 529 + 0 + 361 + 25 + 4 + 36 + 400 + 100 + 36 + 64

= 1556 720 (correction Factor)

= 836

Step 5 : SS between Columns Treatment:

= (19/5) + (41/5) + (52/5) + (8/5) - 720 (correction Factor)

= 962 720 (correction Factor)

= 242

Step 6 : SS between Rows Treatment:

= (20/4) + (24/4) + (26/5) + (26/5) + (24/5) - 720 (correction Factor)

= 726 720 (correction Factor)

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 =6

Step 7: SS Residual or Error = Total SS (SS B/w Columns + SS B/w

Rows)

= 836 (242 + 6)

= 588

Step 8: Calculation of ANOVA

Table No.5.30: The ANOVA Table

5% F-
Source of Limit (or
SS d.f MS F- ratio
variation the table
values)

Between = ( c-1 ) ; = 80.6666/

columns = 242 / 3 F ( 3 , 12 )
242 =(41) 49
(i.e. between = 80.6666 = 8.7446
=3 = 4.7983
occupation)

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Between Rows
=(r1)
(i.e. between = 6/ 4 = 1.5/ 49 F ( 4 , 12 )
Metal 6 =(51)
= 1.5 = 0.3061 = 5.9117
Preference =4
level )

=(c1)
= 588 / 12
Residual or (r1)
588 = 49
Error =3x4

= 12

(3 x 4 ) 1
Total 836
= 11

Inference:

It is identified from the above table that, the calculated ANOVA value

is less than the table value. So, there is no relationship between Risk taking

capacity and age of the respondents. Hence, the null hypothesis accepted.

4. CORRELATION ANALYSIS

Table No.5.31: The table showing Correlation between Spices and metals

Spices (X) 17 20 18 32 33

Metal (Y) 50 32 11 16 11

Step 1: Calculation of Correlation

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 N dx dy ( dx) ( dy)

r = ------------------------------------------

Ndx - ( dx) N dy - ( dy)

Step2: Table No.5.32: Correlation between Spices and metals

(X-24) (Y-25)
X dx Y dy dx dy
dx dy

17 -7 49 50 25 625 -175

20 -4 16 32 7 49 -28

18 -6 36 11 -14 196 84

32 8 64 16 -9 81 -72

33 9 81 11 -14 196 -126

120 0 246 120 -5 1147 -317

r = -0.5980

Inference:

Since the correlation value should lies between -1 & +1. Here, r value

is Negative, so there is No relationship between spices and metals preference

of the respondents.

Table No.33: The table showing correlation between Risk Taking capacity

and precious metals

Risk Taking capacity (X) 20 24 26 26 24

precious metals (Y) 60 19 11 15 15

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Step 1: Calculation of Correlation

N dx dy ( dx) ( dy)

r = ------------------------------------------

Ndx - ( dx) N dy - ( dy)

Step2: Table No.5.34: Calculation of Correlation

(X-26) (Y-30)
X dx Y dy dx dy
dx dy

20 -6 36 60 30 900 -180

24 -2 4 19 -11 121 22

26 0 0 11 -19 361 0

26 0 0 15 -15 225 0

24 -2 4 15 -15 225 30

120 -10 44 120 -30 1832 -128

r = -0.94441

Inference:

Since the correlation value should lies between -1 & +1.Here, r value

is Negative, so there is no relationship between Risk Taking capacity and

precious metals preference of the respondents.

5. WEIGHTED AVERAGE ANALYSIS

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Table No.5.35: The table showing opinion of the respondents preference

of commodity market rating in Share khan Financial Services Pvt. Ltd,

Gobi

Types of Very Hig very Ranki

Medium low Total
commodities High h Low ng

Plantation Products:
17 15 14 34 40 120
Rubber, 9
Score 85 60 42 68 40 295

Spices: Pepper,
Turmeric, 17 20 18 32 33 120
Jeera,chilli, coriander 7

Score 85 80 54 64 33 316

Pulses: Chana 18 20 23 44 15 120

4
Score 90 80 69 88 15 342

Fibres: V-797 kapas ,

26 12 27 30 25 120
shankar kapas 3
Score 130 48 81 60 25 344

Cereals: Wheat,
23 15 25 31 26 120
Barley, 5
Score 115 60 75 62 26 338

Oil and Oil seeds:

22 15 21 32 30 120
Castor seeds, 6
Score 110 60 63 64 30 327

Others: Guar Seeds,

15 14 22 33 36 120
Guar Gum, 8
Score 75 56 66 66 36 299

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 Metals: Steel, Copper,
50 32 11 16 11 120
Zinc, 1
Score 250 128 33 32 11 454

Energy: Crude Oil,

52 20 15 20 13 120
Thermal Coal, 2
Score 260 80 45 40 13 438

Precious Metals: Gold,

Gold (100 gms), Gold
International, Silver,
60 19 11 15 15 120
Silver (5kg), Silver 1
International,
Platinum

Score 300 76 33 30 15 454

Others: CER,
2 0 15 40 63 120
Polyvinyl Chloride 10
Score 10 0 45 80 63 198

Inference:

From the above table by the weighted average method, its observed

that Precious Metals: Gold, Gold (100 gms), Gold International, Silver, Silver

(5kg), Silver International, Platinum commodities have 1 rank of investors

preference, Energy: Crude Oil, Thermal Coal, commodities having the 2nd

Rank of the Investors preference. Fibres: V-797 kapas, Shankar kapas

commodities having the 3rd rank of among the investors preference. Therefore

from the weighted average method majority of the respondents very highly

prefer to invest in the commodities like Precious Metal, Energy and Fibres.

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 CHAPTER VI

FINDINGS, SUGGESTIONS & CONCLUSION

6.1 FINDINGS OF THE STUDY

15.8% of the respondents are belongs 25yrs of age Group, 34.2% of the

respondents are age group between 25 yrs to 50 yrs.,43.3% of the

respondents are between 50 to 75 yrs of age group, and 6.7% of the

respondents are the above 75 Yrs.

27.5 % of the respondents are business people, 46% of the respondents are

professionals, 27% of the respondents are employed, and 14 % of the

respondents are other occupations.

76.7% of the respondents are male investors, and 23.3% of the respondents

are female investors.

16.7 % of the respondents qualification is below schooling, 40% of the

respondents qualification is only under graduates, 31.7% of the

respondents qualification is post graduates and 11.7 % of the respondents

qualification is others like diplomas.

33.3 % of the respondents annual incomes level is below than 2 Lakh,

23.3% of the respondents annual incomes level is between 2 Lakh to 4Lakh,

19.2% of the respondents annual incomes level is in between 4 lakh to 6

lakh, and 24.2% of the respondents annual incomes level is above 6 lakh.
64.2 % of the respondents investment objectives is High Income ,29.2% of

the respondents investment objectives is Reasonable income for safety ,

6.7% of the respondents investment objectives is for retirement welfare and

0% of the respondents an investment objective is tax benefits.

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 30.8% of the respondents of investments portion from their income is below

25 %,35.8% of the respondents of investments portion from their income is

between 25% to 50%, 29.2% of the respondents of investments portion from

their income is between 50% to 75% and 4.2 % of the respondents of

investments portion from their income is above 75%.

16.7 % of the respondents risk taking capacity is very high, 20% of the

respondents risk taking capacity is high, 21.7 % of the respondents risk

taking capacity is medium, 21.7% of the respondents risk taking capacity

is low, and 20% of the respondents risk taking capacity is very low.
49.2% of the respondents current investment is below 1 lakh, 27.5% of the

respondents current investment is between 1 lakh to 2 lakh, 14.2% of the

respondents current investment is between 2 lakh to 3 lakh, 9.2% of the

respondents current investment is above 3 lakh.

49.2% of the respondents are getting investments advice from their friends,

17.5% of the respondents are getting investments advice from their family

members,7.5% of the respondents are getting investments advice from

investment consultants and 25.8% of the respondents are getting

investments advice from others sources.

43.3 % of the respondents higher preference of their investment avenues is

shares, 21.7% of the respondents investment preference is mutual funds,

26.7% of the respondents investment preference is commodity markets and

8.3 % of the respondents investment preference is other savings.

93.3 % of the respondents are well known about commodity market

trading, and 6.7 % f the respondents are not having much aware about

commodity marketing.
49.2% of the respondents are know about commodity market trading

through their friends ,4.2% of the respondents are know about commodity

market trading through their investment traders, 20.8% of the respondents

are know about commodity market trading through mass media, 19.2% of
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 the respondents are know about commodity market trading through the

official investment organizations.

100% of the respondents are involved in commodity trading.
15% of the respondents are having experience in commodity trading below

1 yr. 35% of the respondents are having experience in commodity trading

between 1 to 2 yrs, 19.2% of the respondents are having experience in

commodity trading between 2 to 3 yrs, and 30.8% of the respondents are

having experience in commodity trading more than 3 yrs.

85.8 % of the respondents are daily traders, 5.8% of the respondents are

weekly traders, 2.5% of the respondents are monthly traders, 1.7% of the

respondents are season traders, 2.5% of the respondents are occasionally

trade, and 1.7% of the respondents are trade rarely.

58.3% of the respondents are very high aware of the commodity markets

circular and its regulations , 25% of the respondents are high level

awareness of the commodity markets circular and its regulations, 8.3% of

the respondents are medium level of awareness about the commodity

markets circular and its regulations, 5.8% of the respondents are having

low level of awareness about their commodity markets circular and its

regulations, and 2.5% of the respondents are having very low level of

awareness about their commodity markets circular and its regulations,

68.3% of the respondents are choosing commodity trade for high return.

3.3% of the respondents are choosing commodity trade for moderate return,

3.3% of the respondents are choosing commodity trade for safely return,

and 25% of the respondents are choosing commodity trading because its

required only low margin.

14.2% of the respondents are very highly prefer the plantation products like

rubber, 12.5% of the respondents are highly prefer the plantation products

like rubber, 11.7% of the respondents are prefer medium level of preference

of the plantation products like rubber, and 28.3% of the respondents are
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 prefer low .33.3% of the respondents are very low to prefer the plantation

products like rubber

14.2% of the respondents are very highly prefer the spices products like

pepper,turmeric,jeera,chilli,coriander, 16.7% of the respondents are highly

prefer the spices products like pepper,turmeric,jeera,chilli,coriander, 15%

of the respondents are moderate level of preference of spices products like

pepper, turmeric, jeera, chilli, coriander, 26.7 % of the respondents are

prefer low level of preference of the spices products like pepper, turmeric,

jeera, chilli, coriander, and 27.5% of the respondents are very low to prefer

the spices products like pepper,turmeric,jeera,chilli,coriander.

15% of the respondents are very highly prefer the pulses products like

Chana, 16.7% of the respondents are highly prefer the pulses products like

Chana, 19.2% of the respondents are moderate level of preference in pulses

products like Chana, 36.7 % of the respondents are prefer low level of

preference of the pulses products like Chana, and 12.5% of the respondents

are very low to prefer the pulses products like Chana.

21.7% of the respondents are very highly prefer the Fibers products like V-

797 Kapas, Shankar Kapas, 10% of the respondents are highly prefer the

Fibers products like V-797 Kapas, Shankar Kapas, 22.5% of the

respondents are moderate level of preference in Fibers products like V-797

Kapas, Shankar Kapas, 25 % of the respondents are prefer low level of

preference of the Fibers products like V-797 Kapas, Shankar Kapas, and

20.8% of the respondents are very low to prefer the Fibers products like V-

797 Kapas, Shankar Kapas.

19.2% of the respondents are very highly prefer the Cereals products like

wheat, barley, maize-feed/industrial Grade, 12.5% of the respondents are

highly prefer the Cereals products like wheat, barley, maize-feed/industrial

Grade, 20.8% of the respondents are moderate level of preference in Cereals

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 products like wheat, barley, maize-feed/industrial Grade, 25.8 % of the

respondents are prefer low level of preference of the Cereals products like

wheat, barley, maize-feed/industrial Grade, and 21.7% of the respondents

are very low to prefer the Cereals products like wheat, barley, maize-

feed/industrial Grade.
18.3% of the respondents are very high to prefer the oil and oil seeds,

12.5% of the respondents are highly to prefer the oil and oil seeds, 17.5% of

the respondents are prefer it only the moderate level, 26.7% of the

respondents are prefer only low level and 25% of the respondents are very

low to prefer the oil and oil seeds.

12.5% of the respondents are very high to prefer the other products like

Guar Seeds, potato .11.7 % of the respondents are prefer high level, 18.3

%of the respondents are prefer these products only moderate level, 27.5 %

of the respondents are prefer it low level and 30 % of the respondents are

not to prefer the other products.

41.7% of the respondents are very highly prefer metal products like steel,

copper and nickel, 26.7% of the respondents are highly prefer metal

products like steel, copper and nicke.9.2l % of the respondents are prefer it

only moderate levels, 13.3% of the respondents are prefer only low level and

9.2 % of the respondents are not to prefer the metals to invest.

43.3% of respondents are very high to prefer the energy products, 16.7 % of

the respondents are highly prefer it, 12.5 % of the respondents are only

moderate level of preference, and 16.7% of the respondents are very low to

prefer it. and 10.81% of the respondents are not ready to prefer it
50% of respondents are very high to prefer the Precious metals products,

15.8% of the respondents are highly prefer it, 9.2% of the respondents are

only moderate level of preference, 12.5% of the respondents are very low to

prefer, and 12.5 % of the respondents are not prefer it.

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 1.7% of the respondents are very highly prefer other products like Polyvinyl,

12.5 % of the respondents are moderate level of preference , 33.3 % of the

respondents are very low to prefer it ,52.5 % of the respondents are not to

prefer its.
42.5 % of the respondents are saying about commodity market is price

hedging, 32.5% of the respondents are saying about commodity market is

regulated marketing, 16.7% of the respondents are saying about commodity

market is low risk, and 8.3 % of the respondents are saying about

commodity market is quality products.

67.5% of the respondents are very highly accepted the commodity market

advertisement and its rumors. 20.8% of the respondents are highly accept

the commodity market advertisement and its rumors, 10% of the

respondents are moderate level of acceptance of the commodity market

advertisement and its rumors, 0.8% of the respondents are very low

accepting the commodity market advertisement and its rumors and 0.8% of

the respondents are not to accept the commodity market advertisement and

its rumors.
62.5% of the respondents are saying definitely recommend commodity

trading to others, 27.5 % of the respondents are probably others to trade in

commodity market, 12% of the respondents are not ready to recommend

others to do in commodity trading.

From the chi square analysis between the income and pulses calculation,

the table value of for 12 degree of freedom at 5% level of significance is

21.000. The calculated value is much less than the tabulated value and

hence the result of the experiment supports the hypothesis. We can

conclude that there is no influencing of income to prefer the pulses. (Null

Hypothesis Accepted)

105
 From the chi square analysis between the income and fibers calculation,

the table value of for 12 degree of freedom at 5% level of significance is

21.000. The calculated value is much less than the tabulated value and

hence the result of the experiment supports the hypothesis. We can,

conclude that there is no influencing of income to prefer the fibers. (Null

Hypothesis Accepted)

From the chi square analysis between the occupation and energy

calculation the table value of for 12 degree of freedom at 5% level of

significance is 21.000. The calculated value is much less than the

tabulated value and hence the result of the experiment supports the

hypothesis. We can, thus, conclude that there is no influencing of

Occupation to prefer the Energy. (Null Hypothesis Accepted)

It is noted from the ANOVA calculation between occupation and precious

metal, the calculated ANOVA value is less than the table value. So, there is

no relationship between Occupation and Metal. (Null hypothesis accepted.)

It is noted from the ANOVA calculation between risk taking capacity and

age of the respondents, the calculated ANOVA value is less than the table

value. So, there is no relationship between Risk taking capacity and age of

the respondents. (Null hypothesis accepted).

The correlation calculation between spices and metal, the correlation value

i.e. r value is Negative, so there is No relationship between spices and

metals preference of the respondents.

The correlation calculation between Risk Taking capacity and precious

metals, the correlation i.e. r value is Negative, so there is no relationship

106
 between Risk Taking capacity and precious metals preference of the

respondents.

From the weighted average method, its observed that Precious Metals:

Gold, Gold (100 gms), Gold International, Silver, Silver (5kg), Silver

International, Platinum commodities have 1st rank of investors preference,

Energy: Crude Oil, Thermal Coal, commodities having the 2 nd Rank of the

Investors preference. Fibres: V-797 kapas, Shankar kapas commodities

having the 3rd rank of among the investors preference. Therefore from the

weighted average method majorly of the respondents are very highly

preferring to invest in the commodities like Precious Metal, Energy and

Fibres.

6.2 SUGGESTIONS

Most of the investors are in male category. So Share khan Financial

Services Pvt. Ltd advised to concentrate more on getting the investment

from female investors also.

Compared to Agri, energy, pharmacy sectors, the investors are willing to

prefer bullion sector (GOLD). So the firm should create awareness over

other sectors.

Most of the investors getting the information from their friends, so the firm

should increase the no. of experts available in the market.

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 Some investors are hesitating to recommend investing in commodity market

to other people. So, the firm has to give proper guidelines to the investors

about the investment in commodity market.

The arrangement of experts and specialist seminar for investors will help to

improve their awareness.

The newsletters and special publishing will helps to create high awareness

of commodity market among the investors.

Through appropriate publicity and mass media advertisements the

awareness of investors will raise up.

The present trend of commodity market should be continuously informed to

the investors through telephone or other devices.

6.3 CONCLUSION

The study is made to find out the investors preference towards

commodity market. The study reveals that commodity market is in a nascent

stage in Gobi. The investment avenues of individual investors depend mainly

108
on annual income and risk taking capacity .The female investors in Gobi are

not much aware of commodity market so proper awareness program should be

conducted to improve the awareness level of among them. The major finds of

the study is the majority of the respondents preference falls on precious

metals.

109