COMMODITIES Trading Analysis at Karvy

Commodity Trading Analysis at Karvy
PART-I INTRODUCTION
COMMODITIES MARKET
EXECUTIVE SUMMARY:
Commodities Futures’ trading…! In India have a long history. The first commodity futures
market appeared in 1875. But the new standardized form of trading in the Indian capital market
is an attractive package for all the people who earn money through speculation by trading into
FUTURES. It is a well-known fact and should be remembered that the trading in commodities
through futures’ exchanges is merely, “Old wine in a new bottle”. The trading in commodities
was started with the first transaction that took place between two individuals. We can relate this
to the ancient method of trading i.e., BARTER SYSTEM. This method faced the initial hiccups
due to the problems like: store of value, medium of exchange, deferred payment, measure of
wealth etc. This led to the invention of MONEY. As the market started to expand, the problem of
scarcity piled up. The farmers/traders then felt the need to protect themselves against the
fluctuations in the price for their produce. In the ancient times, the commodities traded were –
the Agricultural Produce, which was exposed to higher risk i.e., the natural calamities and had to
face the price uncertainty. It was certain that during the scarcity, the farmer realized higher prices
and during the oversupply he had to loose his profitability. On the other hand, the trader had to
pay higher price during the scarcity and vice versa. It was at this time that both joined hands and
entered into a contract for the trade i.e., delivery of the produce after the harvest, for a price
decided earlier. By this both had reduced the future uncertainty. One stone still remained
unturned- ‘surety of honoring the contract on part from either of the parties’. This problem was
settled in the year 1848, when a group of traders in CHICAGO came forward to standardize the
trading. They initiated the concept of “to arrive” contract and permitted the farmers to lock in the
price upfront and deliver the grain at a contracted date later. This trading was carried on a
platform called CHICAGO 9 BOARD OF TRADE, one of the most popular commodities trading
exchanges’ today. It was this time that the trading in commodity futures’ picked up and never
looked back. Although in the 19th century only agricultural produce was traded as a future
contract, but now, the commodities of global or at least domestic importance are being traded
over the commodity futures’ exchanges. This form of trading has proved useful as a device for
HEDGING and SPECULATION.
The commodities that are traded today are:

Agro-Based Commodities… Wheat, Corn, Cotton, Oils, Oilseeds etc..
Soft Commodities…………….. Coffee, Cocoa, Sugar etc
Livestock………………………. Live Cattle, Pork Bellies etc
Energy………………………….. Crude Oil, Natural Gas, Gasoline etc
Precious Metals……………….. Gold, Silver, Platinum etc
Other Metals…………………… Nickel, Aluminum, Copper etc
© MGM IOM/MBA IV SEM 2018 Page 1

OBJECTIVES OF THE STUDY

 To study the perception of investors in commodities market.
 To study about major exchanges trading in Indian commodity market.
 To find out the invest pattern of investor saving in different commodities.
 To study the working procedure of trading, governance and basic components of
commodity market.

PART-II
1. INDUSTRY PROFILE
There are three major exchanges for the commodity trading in India. They are:
 The National Commodities and Derivatives Exchange Ltd. (NCDEX)

 Multi Commodities Exchange of India Ltd. (MCX)
 National Multi-Commodity Exchange Ltd. (NMCE)
National Commodity & Derivatives Exchange Limited (NCDEX)

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

Besides, NCDEX is subjected to various laws of the land like the Companies Act, Stamp Act,
Contracts Act, Forward Commission (Regulation) Act and various other legislations, which
impinge on its working.
NCDEX is located in Mumbai and offers facilities to its members in more than 390 centers
throughout India. The reach will gradually be expanded to more centers. NCDEX currently
facilitates trading of thirty six commodities - Cashew, Castor Seed, Chana, Chilli, Coffee,
Cotton, Cotton Seed Oilcake, Crude Palm Oil, Expeller Mustard Oil, Gold, Guar gum, Guar
Seeds, Gur, Jeera, Jute sacking bags, Mild Steel Ingot, Mulberry Green Cocoons, Pepper,
Rapeseed - Mustard Seed, Raw Jute, RBD Palmolein, Refined Soy Oil, Rice, Rubber, Sesame
Seeds, Silk, Silver, Soy Bean, Sugar, Tur, Turmeric, Urad (Black Matpe), Wheat, Yellow Peas,

Yellow Red Maize & Yellow Soybean Meal. At subsequent phases trading in more commodities
would be facilitated.
Multi Commodities Exchange of India Ltd . MCX an independent and de-

mutulised multi commodity exchange has permanent recognition from Government of India for
facilitating online trading, clearing and settlement operations for commodity futures markets
across the country. Key shareholders of MCX are Financial Technologies (India) Ltd., State
Bank of India, NABARD, NSE, HDFC Bank, State Bank of Indore, State Bank of Hyderabad,
State Bank of Saurashtra, SBI Life Insurance Co. Ltd., Union Bank of India, Bank Of India,
Bank Of Baroda, Canara Bank, Corporation Bank.
Head quartered in Mumbai, an expert management team with deep domain knowledge of the
commodity futures markets leads MCX. Through the integration of dedicated resources, robust
technology and scalable infrastructure, since inception MCX has recorded many first to its credit.
Inaugurated in November 2003 by Mr. Mukesh Ambani, Chairman & Managing Director,
Reliance Industries Ltd, MCX offers futures trading in the following commodity categories:
 Agri Commodities,
 Bullion,
 Metals- Ferrous & Non-ferrous,
 Pulses, Oils & Oil seeds,
 Energy,
 Plantations
 Spices
MCX has built strategic alliances with some of the largest players in commodities eco-system,
namely, Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors' Association
of India, Pulses Importers Association, Shetkari Sanghatana, United Planters Association of
India and India Pepper and Spice Trade Association.
Today MCX is offering spectacular growth opportunities and advantages to a large cross section
of the participants including Producers / Processors, Traders, Corporate, Regional Trading
Centers, Importers, Exporters, Cooperatives, Industry Associations, amongst others MCX being
nation-wide commodity exchange, offering multiple commodities for trading with wide reach
and penetration and robust infrastructure, is well placed to tap this vast potential.

Gold, Gold HNI, Gold M, I-Gold, Silver,

Silver HNI, Silver M
Castor Oil, Castor Seeds, Castor Seeds
(Disa), Cottonseed, Crude Palm Oil,
Groundnut Oil, Kapasia Khalli (Cottonseed
Oilcake), Mustard Seed(Hapur),
Mustard Seed (Jaipur), Mustard /Rapeseed
Oil,Mustard Seed (Sirsa),
RBD Palmolein, Refined Soy Oil, Sesame
Seed, Soyameal Soya Seed
Cardamom, Jeera, Pepper, Red Chilli,

Turmeric
Aluminium, Copper, Nickel, Sponge Iron,
SteelFlat, Steel Long (Bhavnagar),
Steel Long (Gobindgarh), Tin
Cotton Long Staple ,Cotton Medium Staple,

Cotton Short Staple, Kapas
Chana, Masur, Tur, Urad, Yellow Peas
Basmati Rice, Maize, Rice, Sarbati Rice,

Wheat
Brent Crude Oil, Crude Oil, Furnace Oil
plantation Cashew Kernel, Rubber
Petro chemical High Density Polyethylene (HDPE),

Polypropylene
(PP),
others Guar Seed, Guargum, Gur, Mentha Oil,
Sugar M-30, Sugar S-30,

The National Multi Commodity Exchange of India ltd.
The first state-of-the-art de-mutualized multi-commodity Exchange, NMCE commenced futures

trading in 24 commodities on 26th November, 2002 on a national scale and the basket of
commodities has grown substantially since then to include cash crops, food grains, plantations,
spices, oil seeds,
metals & bullion among others. NMCE was the first Exchange to take up the issue of differential
treatment of speculative loss. It was also the first Exchange to enroll participation of high net-
worth corporate securities brokers in commodity derivatives market. NMCE has also made
immense contribution in raising awareness about and catalyzing implementation of policy
reforms in the commodity sector.
It was the Exchange, which showed a way to introduce warehouse receipt system within existing
legal and regulatory framework. It was the first Exchange to complete the contractual
Groundwork for dematerialization of the warehouse receipts. Innovation is the way of life at
NMCE.
National Multi Commodity Exchange of India Ltd. (NMCE), promoted by commodity-relevant
public institutions, viz., Central Warehousing Corporation (CWC), National Agricultural
Cooperative Marketing Federation of India (NAFED), Gujarat Agro-Industries Corporation
Limited (GAICL), Gujarat State Agricultural Marketing Board (GSAMB),
National Institute of Agricultural Marketing (NIAM), and Neptune Overseas Limited (NOL).
The Punjab National Bank (PNB) took equity of the Exchange to establish that linkage. Even
today, NMCE is the only Exchange in India to have such investment and technical support from
the commodity relevant institutions. These institutions are represented on the Board of Directors
of the Exchange and also on various committees set up by the Exchange. The experienced and
qualified professionals with impeccable integrity and expertise manage the day-to-day operations
of the Exchange. None of them have any trading interest.

2.1 HISTORY
Commodity-based money and commodity markets in a crude early form are believed to have
originated in Sumer between 4500 BC and 4000 BC. Sumerians first used clay tokens sealed in a
clay vessel, then clay writing tablets to represent the amount for example, the number of goats, to
be delivered. These promises of time and date of delivery resemble futures contract.
Early civilizations variously used pigs, rare seashells, or other items as commodity money. Since
that time traders have sought ways to simplify and standardize trade contracts.
Gold and silver markets evolved in classical civilizations. At first the precious metals were
valued for their beauty and intrinsic worth and were associated with royalty. In time, they were
used for trading and were exchanged for other goods and commodities, or for payments of
labor. Gold, measured out, then became money. Gold's scarcity, its unique density and the way it
could be easily melted, shaped, and measured made it a natural trading asset.
Beginning in the late 10th century, commodity markets grew as a mechanism for allocating
goods, labor, land and capital across Europe. Between the late 11th and the late 13th century,
English urbanization, regional specialization, expanded and improved infrastructure, the
increased use of coinage and the proliferation of markets and fairs were evidence of
commercialization. The spread of markets is illustrated by the 1466 installation of reliable scales
in the villages of Sloten and Os dorp so villagers no longer had to travel to Haarlem or
Amsterdam to weigh their locally produced cheese and butter.
In 1864, in the United States, wheat, corn, cattle, and pigs were widely traded using standard
instruments on the Chicago Board of Trade (CBOT), the world's oldest futures and options
exchange. Other food commodities were added to the Commodity Exchange Act and traded
through CBOT in the 1930s and 1940s, expanding the list from grains to include rice, mill feeds,
butter, eggs, Irish potatoes and soybeans. Successful commodity markets require broad
consensus on product variations to make each commodity acceptable for trading, such as the
purity of gold in bullion. Classical civilizations built complex global markets trading gold or
silver for spices, cloth, wood and weapons, most of which had standards of quality and
timeliness.
Through the 19th century "the exchanges became effective spokesmen for, and innovators of,
improvements in transportation, warehousing, and financing, which paved the way to expanded
interstate and international trade.
Commodity price index
In 1934, the US Bureau of Labor Statistics began the computation of a daily Commodity price
index that became available to the public in 1940. By 1952, the Bureau of Labor Statistics issued
a Spot Market Price Index that measured the price movements of "22 sensitive basic commodities
whose markets are presumed to be among the first to be influenced by changes in economic
conditions. As such, it serves as one early indication of impending changes in business activity.

Cash commodity
Cash commodities or "actual" refer to the physical goods—e.g., wheat, corn, soybeans, crude oil,
gold, and silver that someone is buying/selling/trading as distinguished from derivatives.
Complexity and interconnectedness of global market

The robust growth of emerging market economies (EMEs, such as Brazil, Russia, India, and
China), beginning in the 1990s, "propelled commodity markets into a super cycle". The size and
diversity of commodity markets expanded internationally, and pension funds and sovereign
wealth funds started allocating more capital to commodities, in order to diversify into an asset
class with less exposure to currency depreciation.
In 2012, as emerging-market economies slowed down, commodity prices peaked and started to
decline. From 2005 through 2013, energy and metals' real prices remained well above their long-
term averages. In 2012, real food prices were their highest since 1982.
2.2 Growth
The Karvy Group is a premier integrated financial services provider, ranked among the top-5 in
the country across its business segments. The Group services over 70 million individual investors
in various capacities, and provides investor services to over 600 corporate houses. Karvy Group
established its presence through a wide network of over 450 branches, (or 900 offices) covering
in excess of 400 cities and towns.
2.3 International and National scenario

Karvy Stock Broking LTD
Equity Broking, Depository Participant, Distribution of Financial Products (Mutual Funds, FD
and Bonds), Wealth Management Services, Currency Derivatives, Portfolio Management
Services
Karvy Comtrade LTD
Commodities Broking
Karvy Capital LTD (Formerly Karvy Capital Private LTD)
Realty Services
Karvy Financial Services LTD
Non Banking Financial Services
Karvy Insurance Repository LTD
Insurance Repository services
Karvy Forex & Currencies Private LTD
Currency and forex services
Karvy Consultants LTD
Agent for Custody & Registration of Securities, Registered Administrator

Karvy Data Management Services LTD

Data Management Services
Karvy Investor Services LTD
Merchant Banking and Corporate Finance
Karvy Insights LTD
Market Research
Karvy Analytics LTD
Analytics
Karvy Solar Power LTD
Power Generation
Karvy Global Services LTD
Business Process Outsourcing
Karvy Global Services Inc, USA
Business Process Outsourcing
Karvy Inc, USA
2.4 SOME PROMINENT COMPANIES IN THE INDUSTRY, THEIR
PERFORMANCE/CONTRIBUTION
2.4.1 Cutting-edge technology expertise: The success of Karvy group including KCTL rests on
the pillars of state-of-the-art technology, which has kept us highly competitive, cost effective and
innovative in the business of commodity derivatives trading in the last decade. Our strong, tech
backbone allows clients to execute one-touch trade on the go. Our robust, nation-wide
connectivity offers instant, easy, transparent and efficient transactions on a superior trading
platform. Our trading software can be installed on PCs, tablets and Smartphone.
2.4.2 Personalized Services: We offer a suite of custom-made products, after carefully studying
the client’s profile. Regardless of your occupation (whether you are a farmer, manufacturer,
investor, speculator, importer or exporter), we offer you the solution that best suits your
requirements. We also appoint dedicated relationship manager to resolve your queries and
smooth execution of transactions.
2.4.3 Effective Back Office and Operations: Our large and efficient data processing operation
ensures zero delays. Client applications are processed almost instantly and they can begin trading
virtually the very day they sign up.
2.4.4 Efficient RMS: Our superior Risk Management System (RMS) updates the client instantly
about any deviations in the trade, and extensive network of branches can resolve such issues
instantly.
2.4.5 Large Network of Branches: KCTL has expanded its presence in every nook and corner
of the country with a network of 900 offices and associate partners across 400 Indian cities.

2. COMPANY PROFILE
INTRODUCTON TO KARVY
KARVY, is a premier integrated financial services provider, and ranked among the top five in
the country in all its business segments, services over 16 million individual investors in various
capacities, and provides investor services to over 300 corporate, comprising the who is who of
Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking,
Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit,
equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services,
Merchant Banking & Corporate Finance, placement of equity, IPO’s, among others. Karvy has a
professional management team and ranks among the best in technology, operations and research
of various industrial segments.
EARLY DAYS the birth of Karvy was on a modest scale in 1981. It began with the vision and
enterprise of a small group of practicing Chartered Accountants who founded the flagship
company, Karvy Consultants Limited. They started with consulting and financial accounting
automation, and carved inroads into the field of registry and share accounting by 1985. Since
then, they have utilized their experience and superlative expertise to go from strength to strength
to better their services, to provide new ones, to innovate, diversify and in the process, evolved
Karvy as one of India’s premier integrated financial service enterprise.
Thus over the last 20 years Karvy has traveled the success route, towards building a reputation as
an integrated financial services provider, offering a wide spectrum of services. And they have
made this journey by taking the route of quality service, path breaking innovations in service,
versatility in service and finally, totality in service.23Their highly qualified manpower, cutting-
edge technology, comprehensive infrastructure and total customer-focus has secured for them the
position of an emerging financial services giant enjoying the confidence and support of an
enviable clientele across diverse fields in the financial world. Their values and vision of attaining
total competence in their servicing has served as the building block for creating a great financial
enterprise, which stands solid on their fortresses of financial strength - their various companies.
With the experience of years of holistic financial servicing behind them and years of complete
expertise in the industry to look forward to, they have now emerged as a premier integrated
financial services provider.
And today, they can look with pride at the fruits of our mastery and experience –comprehensive
financial services that are competently segregated to service and manage a diverse range of
customer requirements.
KARVY ACHIEVEMENTS
 Among the top 5 stock brokers in India (4% of NSE volumes)
 India's No. 1 Registrar & Securities Transfer Agents

 Among the to top 3 Depository Participants

 Largest Network of Branches & Business Associates
 ISO 9002 certified operations by DNV
 Among top 10 Investment bankers
 Largest Distributor of Financial Products
 Adjudged as one of the top 50 IT uses in India by MIS Asia
2.1 BACKGROUND AND INCEPTION OF THE COMPANY

Founded in 1978 and listed on the Australian Securities Exchange since 1994, Computershare
employs over 10,000 people across the globe, providing services in over 20 countries to more than
30,000 clients. Investor services is our largest business line – we work with public companies,
including many of the worlds’ largest, to track and deliver their shareholders’ entitlements. Services
range from keeping the definitive record of legal ownership of securities to paying dividends to
shareholders on our clients’ behalf; from administering meetings and tabulating voting (whether
directly or by proxy) to advising on and executing capital raising; and from capital reorganizations to
merger and acquisition transactions. Our equity compensation plan administration business supports
our clients in managing their employee share plans and other equity compensation programs. For 75
years, our Georges on proxy solicitation business has assisted companies in communicating with and
gaining shareholder response in relation to issues being considered at shareholder meetings, corporate
restructuring and merger transactions, as well as capital raising.
Our communications services business provides tailored and individually customized outbound and
inbound communications solutions across a range of business needs, with particular expertise in
communications between public companies and their shareholders. We offer a range of technology
solutions to support our clients, including wireless voting and audience participation devices and
software solutions to support company secretaries in their governance of complex group structures.
In addition to these services relating to the public equities markets, our expertise and our high-
integrity secure infrastructure enables our various offices around the world to deliver a wide range of
services. These include trust, escrow and debt management services ; independent custody of tenancy
deposits; childcare tax voucher schemes; bankruptcy and class action claims administration; mutual
fund record-keeping and proxy solicitation; and back office services for utility companies and
mortgage loan servicing.
Computershare is the largest provider globally of many of the services we offer. The unparalleled
expertise of our people, our continued investment in technology (we spend over USD 150 million
each year), our excellent customer service and our geographical spread mean that we have market
leading offerings across the diverse range of our businesses.
Karvy has traveled the success route, towards building a reputation as an integrated financial services
provider, offering a wide spectrum of services for over 20 years.
Karvy, a name long committed to service at its best. A fame acquired through the range of corporate
and retail services including mutual funds, fixed income, equity investments, insurance ……… to
name a few. Our values and vision of attaining total competence in our servicing has served as a
building block for creating a great financial enterprise.

The birth of Karvy was on a modest scale in the year 1982. It began with the vision and enterprise of
a small group of practicing Chartered Accountants based in Hyderabad, who founded Karvy. We
started with consulting and financial accounting automation, and then carved inroads into the field of
Registry and Share Transfers. Since then, we have utilized our quality experience and superlative
expertise to go from strength to strength to provide better and new services to the investors. And
today, we can look with pride at the fruits of our experience into comprehensive financial services
provider in the Country..
2.2 NATURE OF THE BUSINESS CARRIED OUT

At Karvy Commodities, we are focused on taking commodities trading to new dimensions of
reliability and profitability. We have made commodities trading, an essentially age-old practice,
into a sophisticated and scientific investment option. Here we enable trade in all goods and
products of agricultural and mineral origin that include lucrative commodities like gold and silver
and popular items like oil, pulses and cotton through a well-systematized trading platform. Our
technological and infrastructural strengths and especially our street-smart skills make us an ideal
broker. Our service matrix is holistic with a gamut of advantages, the first and foremost being our
legacy of human resources, technology and infrastructure that comes from being part of the Karvy
Group. Our wide national network, spanning the length and breadth of India, further supports
these advantages. Regular trading workshops and seminars are conducted to hone trading
strategies to perfection. Every move made is a calculated one, based on reliable research that is
converted into valuable information through daily, weekly and monthly newsletters, calls and
intraday alerts. A dedicated team committed to giving hassle-free service while the brokerage rates
offered are extremely competitive provides further, personalized service here. Our commitment to
excel in this sector stems from the immense importance those commodities broking has to a cross-
section of investors – farmers, exporters, importers, manufacturers and the Government of India
itself.
2.3 VISION, MISSION AND QUALITY POLICY
VISION:
Strive to be the leaders and experts through our processes, people and technology offering the
unique blend that delivers superior value by establishing and maintaining the highest levels of
services and professionalism.
MISSION:
To be the leading and preferred service provider to our customers, and we aim to achieve this
leadership position by building an innovative, enterprising, and technology driven organization
which will set the highest standards of service and business ethics.

QUALITY POLICY:
To achieve and retain leadership, Karvy shall aim for complete customer satisfaction, by
combining its human and technological resources, to provide superior quality financial services.
In the process, Karvy will strive to exceed Customer's expectations.
2.4 PRODUCT/SERVICES PROFILE
 EQUITY BROKING SERVICES
Our equity advisors will help you time the market better with their expert guidance and ensure
that you make smart decisions.
Stock markets are considered unpredictable, but they reflect the mood of the economy. Over the
years, investment in equities is considered to be the best long-term wealth maximization option.
The gap between unpredictability and a safety anchor in the market is bridged by the in-depth
knowledge of market functioning and changing trends, planning with foresight and choosing
one’s options with care. From that perspective, our equity broking and advisory services are
beyond just a medium for buying and selling stocks and shares. Instead, we provide services
which are multi-dimensional and multi-focused in its scope
 DEMAT ACCOUNT
The onset of the technology revolution in the financial-services industry saw the emergence of
KSBL as an electronic custodian registered with the National Securities Depository Ltd (NSDL)
and Central Securities Depository Ltd (CSDL) in 1998. We set standards enabling further
comfort to the investor by promoting paperless trading across the country, emerging as one of the
top-3 depository participants in India, in terms of customers serviced.
 DISTRIBUTION OF FINANCIAL PRODUCTS

Build your financial portfolio with our wide range of offerings in Financial Products Don’t put
all your eggs in one basket. Diversify your investments in a wide range of financial products and
ensure safety and growth of your portfolio.
 CURRENCY DERIVATIVES
Karvy Currency Derivatives Segment, a specialized group vertical within Karvy Stock Broking
Limited, has been established in 2008 to cater to the growing needs of corporate houses to
manage currency exchange rate risk. With the changing dynamics and increasing volatility of
exchange rates across the globe, companies exposed to currency risk face the challenge of
maintaining continued profit margins. Currency Derivatives would be one of the best options to
manage any related exchange rate risk and be free from the worries of market uncertainties.

 WEALTH MANAGEMENT SERVICES
Karvy is offering comprehensive wealth management solutions for its customers through Karvy
Private Wealth (KPW) It is not how exotic your portfolio is but how well it is structured to meet
your objectives and give you regular returns whatever the economic environment.
Karvy, with over 25 years’ expertise in the financial markets, is offering comprehensive wealth
management solutions for its customers through Karvy Private Wealth (KPW). Our wealth
managers provide direction to a client’s financial decisions, enabling him achieve his financial
and life goals.
 PMS
Direct equity investors are often seen disappointed with the performance of their portfolios, as
human emotions of greed and fear makes them commit errors. Also, all equity investments
require regular monitoring for cleaning up holdings that become junk with time, hence it is a
time-consuming activity. All these reasons and more, make ‘Portfolio Management Services’
more suitable for the HNIs.
 COMMODITIES BROKING
Learn how to be successful in Commodities trading. Our award winning team will help you
make your mark in this emerging investment opportunity. An ISO 9001:2008 certified company,
Karvy Comtrade Limited (KCTL) is India’s leading commodities brokerage house. We have
membership of Multi Commodity Exchange of India (MCX), National Commodity and
Derivatives Exchange (NCDEX), National Multi-Commodity Exchange of India (NMCE),
National Spot Exchange (NSEL), NCDEX Spot Exchange (NSPOT), Ace Commodity Exchange
(ACE) and Indian Commodity Exchange (ICEX). We are one of the early players in this business
and have built a very strong research which is widely acknowledged across our customer base be
it the corporates or the traders who comprise our prime customer segment. We are by far the only
commodity trading entity who have a presence in the wholesale markets where the commodities
 NON - BANKING FINANCIAL SERVICE
Personal loans, business loans, loans against security all within easy reach with minimum fuss
and maximum service. Karvy Finance, an NBFC established in 2009, is primarily focused on
Micro & Small Enterprise Secured Business Loans with Loan against Property, Loan against
Gold & Loan for Small Commercial Vehicles. Karvy Finance believes in serving the
underserved business customers in India’s market for all their loan needs with a network of 75
neighborhood lending branches in 35 locations
2.5 AREA OF OPERATION – GLOBAL/NATIONAL/REGIONAL

The company provides investment, advisory and brokerage services in Indian Commodities
Markets. And most importantly, we offer a wide reach through our branch network of over 225
branches located across 180 cities.

2.6 ORGANIZATIONAL STRUCTURE

(hierarchy of the organization & concerned department)
Organization Chart
Website Management Team General Management Team
Web Information Manager (M. Sreejith) Managing Director (C. Parthasarathy)
Web Supervisor (Umesh T)

Chief Executive Officer
(V. Ganesh)
Technical Manager
(N. Ratnagiri Rao & LVS Ramachandra
Rao) C.F.O, Compliance Officer & Company Secretary
Technical Supervisor (Rakesh Santhalia)
(I Lakshmana Murthy)
Head Issuer Interface & Operations
(M R V Subrahmanyam)
Head IT - Software Development

(T. Mallikarjunaiah)
Chief Information Security Officer

(Venkat Srireddy)

2.7 OWNERSHIP PATTERN

Mr. C. Parthasarathy
Chairman & Managing Director
Mr. C. Parthasarathy is the Chairman and Managing Director of the diversified financial services
Karvy group. C Parthasarathy (CP as he is better known in the Industry), has the uncanny knack
of staying ahead of the curve and the foresight to spot opportunities that seem invisible on the
horizon for the others. Karvy’s entire history is a case study of turning adversity into
opportunity. CP is a chartered accountant by qualification, whose entrepreneurial energy drove
him to co-found Karvy in 1983 with a less-than-modest capital of Rs 150,000.
Mr. M. Yugandhar
Managing Director
Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group. He is a

Fellow Member of the Institute of Chartered Accountants of India and has varied experience in
the field of financial services spanning over 30 odd years. Yugandhar has helped position and
build a strong brand for the group in the registry and other financial services businesses. The
registry business of Karvy is one of its flagship businesses and with the collaboration with
Computershare has grown to become the largest registrar in India for over two decades.
Mr. M. S. Ramakrishna
Director
Mr. M S Ramakrishna, Director, founder member of KARVY GROUP, he is the orchestrator of
technology initiatives such as the call center in the service of the customer.
Mr. G. Krishna Hari

Group Head - Finance
Mr. G. Krishna Hari holds a Bachelors degree in Commerce and is associate member of the
Institute of Chartered Accountants of India (ICAI).
2.8 INFRASTRUCTURAL FACILITIES
Investor Service Centers (ISCs), commonly known as 'Branches', are the points of contact for
all transactions. With a reach of more than 400 branches, Karvy Computershare constantly
strives to offer top-notch 'over the counter' services to investors. All ISCs are equipped with
state-of-the-art infrastructure to allow easy access to information, products and services.
Operations and customer interaction are facilitated by highly skilled and dedicated manpower
to deliver quality service, customer satisfaction and maintain standards across branches

2.9 FINANCIAL CONDITION

(Turnover, Profitability, Source of finance-long term& short term)
The total paid-up capital is INR 78.25 cr. The company also has secured loans in the amount of
INR 208.74 cr.
The last reported AGM (Annual General Meeting) of the company, per our records, was held on
30 December, 2017. Also, as per our records, its last balance sheet was prepared for the period
ending on 31 March, 2017.
 AUTHORIZED CAPITAL: INR 20500.0 Lacs
 PAIDUP CAPITAL: INR 7825.0 Lacs
3.0 ACHIEVEMENT AWARD

Chairman of the diversified financial services group- Karvy, C Parthasarathy has bagged
the ‘Entrepreneur of the Year’ award from the Telangana government for 2017. The award was
given for his contribution to IT sector in the state apart from employment generation.
2016
 Karvy Comtrade Limited received “Market Excellence Award, Commodities - Metal” at the Zee
Market Excellence Awards 2016.
 The SKOCH – BSE Order of Merit award and the SKOCH – BSE Aspiring Nation award for KSBL’s
efforts to educate, empower and help create an enlightened corps of financial market investors
2014
 KSBL won the "NSDL Star Performer Award 2014 for Highest Asset Value" the third
time consecutively.
 Karvy Comtrade Limited won the prestigious ZEE Business Award for the "Best
Agricultural Analyst" in the fifth edition of India’s Best Market Analyst
2011
 Karvy Comtrade also bagged the ‘Broker with Best Corporate Desk for Commodity
Broking’ award at the Bloomberg UTV Financial Leadership Awards 2011
2010
 KSBL won an award for being the ‘Largest E-Broking House in India’ by Karvy Stock
Broking Limited at the prestigious Dun & Bradstreet – BSE Equity Broking Awards
2010

PART-III LITERATURE SURVEY
CONCEPTUAL AND THEORETICAL REVIEW
COMMODITY DERIVATIVES
Commodity market is an important constituent of the financial markets of any country. It is the
market where a wide range of products, viz., precious metals, base metals, crude oil, energy and
soft commodities like palm oil, coffee etc. are traded. It is important to develop a vibrant, active
and liquid commodity market. This would help investors hedge their commodity risk, take
speculative positions in commodities and exploit arbitrage opportunities in the market.
The need for a futures market in the commodities, especially, in the primary commodities was
emphasized because such a market not only provides ample opportunities for effective
management of price risk, but also, assists inefficient discovery of prices which can serve as a
reference for the trade in the physical commodities in both the external as well as in the internal
market.
FINANCIAL DERIVATIVES
The term derivatives refer to a large number of financial instruments whose value is derived
from the underlying assets. Derivative instruments like the options and futures facilitate the
trading in financial contracts. The most important underlying instruments in the market are in the
form of Equity, treasury bills, and foreign exchange. The trading in the financial derivatives has
attracted the prominent players of the equity markets.
TRADING INSTRUMENTS
Derivatives in the recent times have become very popular because of their wide application.
Before getting into the hard talks about the commodities trade, let us know about the trading
instruments in the derivatives, as they are similarly applicable to the commodities derivatives.
There are 4 types of Derivatives instrument:

1. Forward contract
2. Future contract
3. Options contract
4. Swap
Futures and Options are actively used in many exchanges whereas; Forwards and
Swaps are mostly trade Over the Counter (OTC).

1. FORWARDS CONTRACT
A spot or cash market is the most commonly used for trading. A majority of our day-to-day
transactions are in the cash market. In addition to the cash purchase, another way trading is by
entering into a Forward contract. A Forward contract is an agreement to buy or sell an asset on a
specified date of a specified price. These contracts are usually entered between a financial
institution and its corporate clients or two financial institutions themselves. In the context to the
Commodity trading, prior to the standardization, the trade was carried out as a forwards contract
between the Associations, Producers and Traders. Where the Association used to act as counter
for the trade.
A forward contract has been in existence in the organized commodities exchanges for quite
sometimes. The first forward contract probably started in Japan in the early 18th century, while
the establishment of the CHICAGO BOARD OF TRADE (CBOT) in 1848 led to the start of a
formal commodities exchange in the USA. Forward contracts are very useful in HEDGING and
SPECULATION. The essential idea of entering into the forward contract is to Hedge the price
thereto avoid the price risk. By entering into a forward contract one is assured of the price at
which the goods/assets are bought and sold. The classic Hedging example would be that of an
exporter who expects to receive payment in foreign currency after three months. As he is
exposed to greater amount of risk in the fluctuations in the exchange rates, he can, with the use
of forwards, lock-in the rate today and reduce the uncertainty. Similarly, if a speculator has the
information of an upswing in the prices of the asset, he can go long on the forward market
instead of the cash market and book the profit when the target price is achieved. The forward
contract is settled at the maturity date. The holder of the short position delivers the assets to the
holder of the long position on the maturity against a cash payment that equals to the delivery
price by the buyer. The price agreed in the forwards contract is the DILIVERY PRICE. Since the
delivery price is chosen at the time of entering into the contract, the value of the contract
becomes zero to both the parties and costs nothing to either the holder of the long position or to
the holder of the short
Position.
The salient features of a forwards contract are:
 It is a bilateral contract and hence is exposed to counter-party risk.
 Every contract is unique and is custom designed in the terms of: expiration date and the asset type
and quality.
 The contract price is not available in the public domain.
On the expiration, the contract is to be settled by the delivery of the asset. Of the party wishes to
reverse the contract, he has to go to the same counter-party, which may result o attract some
charges.

2. FUTURES CONTRACT
“Financial futures represent the most significant financial innovations of the last twenty years.”
As quoted by MERTON MILLER, a noble lauret’ 1999.
The father of financial derivatives is Leo Me lamed. The first exchange that traded in the
financial derivatives was INTERNATIONAL MONETARY MARKET, wing of the Chicago
Mercantile Exchange, Chicago, in the year 1972.
The futures market was designed to solve the problems, existing in the forwards market. A
financial future is an agreement between two parties to buy or sell a standard quantity of a
specified good/asset on a future date at an agreed price. Accordingly, future contracts are
promises: the person who initially sells the contract promises to deliver a specified underlying
asset to a designated delivery point during a certain month, called delivery month. The
underlying asset could, well be, a commodity, stock market index, individual stock, currency,
interest rates etc.. The party to the contract who determines to pay a price for the goods is
assumed to take a long position, while the other who agrees to sell is assumed to be taking a
short position.
The futures contracts are standardized in the terms of:

 Quantity of the underlying assets.
 Quality of the underlying assets.
 Date and month of the delivery.
 Units of the price quotations and minimum price change, and Location of the settlement.
 It is due to the standardization that the futures contract has an edge with the Forward contract, in the terms
of: Liquidity, safety and the security to honoring the contract which is otherwise not secured in an OTC
trading forwards contract
In short, futures contract is an exchange-traded version of the usual forward contract. There are
however, significant differences between the two and the same can be appreciated from the
above discussion.
Benefits to Industry from Futures trading:

 Hedging the price risk associated with futures contractual commitments.
 Spaced out purchases possible rather than large cash purchases and its storage.
 Efficient price discovery prevents seasonal price volatility.
 Greater flexibility, certainty and transparency in procuring commodities would aid bank lending.
 Facilitate informed lending.
 Hedged positions of producers and processors would reduce the risk of default faced by banks.
 Lending for agricultural sector would go up with greater transparency in pricing and storage.

 Commodity Exchanges to act as distribution network to retail agri-finance from Banks to rural
households.
 Provide trading limit finance to Traders in commodities Exchanges.
3. OPTIONS CONTRACT
Options have existed over a long period but were traded over the counter (OTC) only. These
contracts are fundamentally different from that of futures and forwards. In the recent years
options have become fundamental to the working of global capital markets. They are traded on a
wide variety of underlying assets on both, the exchanges and OTC. Options like the futures are
also available on many traditional products such as equities, stock indices, commodities and
foreign exchange interest rates etc., options are used as a derivate instrument only in financial
capital market in India and not in commodity derivatives. It is in the process in introduction.
Options, like futures, also speculative in nature. Options is a legal contract which, facilitate the
holder of the contract, the right but not the obligations to buy or sell the underlying asset at the
fixed rate on a future date. It should be highlighted that, unlike
That the futures and forward contract the options gives the buyer of the contract, the right to
enter into a contract and he doesn’t have to necessarily exercise the right to give, take the
delivery. When a contract is made the buyer has to pay some money as a ‘Premium’ to the seller
to acquire such a right.
Options are basically of two types:

3.1. Call options
3.2. Put options
3.1. Call options: A call options gives the buyer the right to buy the underlying asset at a strike price
specified in the option. The profit/loss depends on the expiration date of the contract if the spot price
exceeds the strike price the holder of the contract books a profit and vice-versa. Higher the spot price
more is the profit.
3.2. Put options: A put option give the buyer the right to sell the underlying asset at the strike
price specified in the option. The profit/loss that the buyer makes on the option depends on the
spot price of the underlying asset. If the spot price is below the strike price he makes profit and
vice-versa. If the spot price is higher than the strike price he will wait up to the expiry or else
book the profit early
4. SWAPS:
Swaps were developed as a long-term price risk management instrument available on the over-
the-counter market. Swaps are private agreements between two parties to exchange cash flows in
the future according to a pre-arranged formula. These agreements are used to manage risk in the
financial markets and exploit the available opportunity for arbitrage in the capital market.

A swap, generically, is an exchange. In the financial parlance it refers to an exchange of a series

of cash flows against another series of cash flows. Swaps are also used in the asset/liability
management to obtain cost-effective financing and to generate higher risk-adjusted returns. With
swaps, producers can effectively fix, i.e. lock in, the prices they receive over the medium to
long-term, and consumers can fix the prices they have to pay. No delivery of the asset is
involved; the mechanism of swaps is purely financial. The swaps market originated in the late
1970’s, when simultaneous loans were arrange between British and the US entities to bypass
regulatory barriers on the movement of foreign currency .the land mark transaction Between the
World Bank and the IBM in august 1981, paved the way for the development of a market that
has grown from a nominal volume in the early 1980’s to an outstanding turnover of US $
46.380tn in 1999.
The swaps market offers several advantages like:
 These agreements are undertaken privately while transactions using exchange traded derivatives are
public.
 Since the swaps products are not standardized, counter parties can customize cash-flow streams to
suit their requirements
 The swaps can be regarded as portfolios of forward contracts.
The two commonly used swaps are:
4.1. Interest rate swaps: These entail swapping only the interest related cash flows between
The parties in the same currency
4.2. Currency swaps: These entail swapping both principal and interest between the parties,
with the cash flows in one direction being in a different currency than those in the opposite
direction.
PARTICIPANTS IN THE DERIVATIVE MARKET

There are three major participants in the derivatives market. They are:
1. Hedgers
2. Speculators
3. Arbitragers
1. HEDGERS
He is the person who enters the derivatives market to lock-in their prices to avoid exposure to
adverse movements in the price of an asset. While such locking may not be extremely profitable
the extent of loss is known and can be minimized. They are in the position where they face risk
associated with the price of an asset. They use derivatives to reduce or eliminate risk.
For example, a farmer may use futures or options to establish the price for his crop long before
he harvests it. Various factors affect the supply and demand for that crop, causing prices to rise
and fall over the growing season. The farmer can watch the prices discovered in trading at the
CBOT and, when they reflect the price he wants, will sell futures contracts to assure him of a

fixed price for his crop. A perfect hedge is almost impossible. While hedging Basis risk could
arise.
Basis= Spot price of asset to be hedged – Futures price of the contract used.
Basis risk arises as a result of the following uncertainties:

The exact date when the asset will be bought or sold may not be known. The hedge may require
that the Futures contract be closed before expiration.
2. SPECULATORS:
A speculator is a one who accepts the risk that hedgers wish to transfer. A speculator takes
positions on expectations of futures price movements and in order to make a profit. In general a
speculator buy futures contracts when he expect futures prices to rise and sell futures contract
when he expects futures prices to fall, but has no desire to actually own the physical commodity.
Speculators wish to bet on the future movement in the price of an asset. They use
Derivatives to get extra leverage. They take positions in the market and assume risk to profit
from fluctuations in the prices. In fact, the speculators consume the information, make forecast
about the prices and put their money in these forecast. By taking positions, they are betting that
the price would go up or they are betting it would go down. Depending on their perception, they
may long or short positions on the futures or /and options, or may hold spread positions.
3. ARBITRAGEURS
Simultaneous purchase of securities in one market where the prices thereof are low and Sale
thereof in another market, where the price thereof is comparatively higher. These are Done when
the same securities are been quoted at different prices in the two markets, with a view to make a
profit and carried on with the conceived intention to derive advantage from difference in prices
of securities prevailing in the two markets”. -As defined by The Institute of Chartered
Accountants of India.
Arbitrageurs thrive on the market imperfections. They profit by trading on given commodities, or
items, that are in the business to take advantage of a discrepancy between prices in two different
markets. If, for example, they see the future prices of an asset getting out of line with the cash
price, they will take offsetting positions in the two
Markets to lock in a profit.
Thus, the arbitrage involves making risk-less profit by simultaneously entering into transactions
in two or more markets. With the introduction of derivate trading the scope of arbitrageurs’
activities extends to arbitrage over time i.e., he can buy securities in an index today and sell the
futures, maturing in the month or two.
TRADING OF COMMODITY DERIVATIVES IN INDIA

Trading of all the derivatives in India is carried over:
 Exchanges
 Over the counter

EXCHANGE TRADING
An asset (commodity/stock), when is traded over an organized exchange is it is termed, to be
traded on the Exchange. This type of trading is the general trading which we see on the major
exchanges world over. The settlement in the exchange trading is highly standardized.
OVER THE COUNTER TRADING

An asset (commodity/stock) is traded over the counter usually because the company is small and
unable to meet listing requirements of the exchanges and facilitates the trading in those areas
where the exchanges are not located. Also known as unlisted the assets are traded by
brokers/dealers who negotiate directly with one another over computer networks and by phone.
Instruments such as bonds do not trade on a formal exchange and are thus considered over-the-
counter securities. Investment banks making markets for specific issues trade most debt
instruments. If someone wants to buy or sell a bond, they call the bank that makes the market in
that asset.
The major commodities trading exchanges globally are:

 Chicago Board Of Trade (COBOT). U.S.A.
 New York Mercantile Exchange (NYMEX). U.S.A.
 London Metal Exchange (LME). United Kingdom.
 Tokyo Commodity Exchange (TOCOM). Japan
 International Petroleum Exchange (IPE).
 London Metal Exchange (LME). United Kingdom
 Sydney Futures Exchange (SFE). Australia
 Brazilian Futures Exchange (BBF). Brazil
 Winnipeg Commodity Exchange (WCE). Canada
 Hong Kong Futures Exchange (HKFE). Hong Kong
 New Zealand Futures & Options Exchange (NZFOE). New Zealand
 Russian Commodity and Raw Materials Exchange. Russia
 Singapore International Monetary Exchange (SIMEX). Singapore
 South African Futures Exchange (SAFEX). South Africa
 Dalian Commodity Exchange. China
 Shanghai Metal Exchange (SME). China

THEORETICAL REVIEW
 Vivek Rajvanshi (2015) in his paper “Commodity Futures Market in India”, explained the
functioning of futures market and challenges of the futures market. The paper detailed the
inception of commodities and their growth to become an alternative class of investment and
heading towards financialization. Challenges along with the growth were focused in the study.
The study concludes that the Futures market dominates the spot market and the results suggest
that inefficiencies in market led to increase in Basis Risk which can be reduced by hedging the
commodity futures. The paper also suggests that commodity futures provide transparent price
discovery for the traded commodities. Also, the market participants are concerned about the
liquidity and higher transaction costs
 Bhaskar Goswami, Isita Mukherjee (2015) in the paper “How attractive is the Commodity
Futures in India?” compared the return on commodity futures with common stocks, long term
government bonds, treasury bills , rate of inflation and detailed that high returns are generally
associated with high risk in line with the general theory of risk-return. The standard deviation on
real rates of return of commodity futures are same as the standard deviation on nominal rates of
return. Results suggest that thought common stocks gave higher return but provided poor
hedging during inflation.
 S. Selvanathan, Dr. V. Manohar (2013) in the paper “Online Trading - An Insight to
Commodities Trade with Special Reference to India” explained the online trading process and
the related trends in India. It is concluded that online trading in India has not taken off in spite of
the benefits which include low transaction costs, convenience, speed, boundary spanning,
improved communication, and risk management. One of the reason quoted for the same was the
economic conditions of traders and the study also expects that online trading in commodities will
improve with better economic conditions
 Sunanda Sen, Mahua Paul (2010) in the paper “Trading in India’s Commodity Future Markets”
attempted to study the development of commodity futures market and the official policies on
future trading. It is observed that future trading in agricultural products neither resulted in price
discovery nor in less volatility in food prices. Also explained that future markets in commodities
seem to provide new avenues of speculation to traders. The link between commodity futures and
trading in financial markets

PART-IV
RESEARCH METHODOLOGY
4.1 Research design: Research design is based on Descriptive design.
4.2 Type of data:
 Primary data has been collected from the private Employee, Government Employee, retired
Employee and self employed during (20 march to 10 April) 2018 with help of a structured
questionnaire with random sample of 100 respondents have been taken for carrying out the
study.
 Secondary data has collected through company official website karvy ltd and additional
information accumulated already published articles related data with commodity market has
been drawn from various published sources and includes professional business journal and
magazines, besides the newspaper, data relating to karvy has been collected from company
records.
4.3 Methods of data collection: Data collection method is primary data based on who took
questionnaire.
4.4 Sampling method, sample size, sample area, sample unit :
4.4.1 Sampling method: Type of sampling method adopted here is random sampling
method.
4.4.2 Sample size: I have selected 100 respondents.
4.4.3 Sample areas: Aurangabad city
4.4.4 Sample unit: private employee, self employed and government employee

PART-V DATA ANALYSIS AND INTERPRETATION
1). Gender
Table No: 1
Options Respondent %
Male 82 82
female 18 18
Total 100 100
female
18%
Male
82%
Interpretation:
As per the chart highlight we took questionnaire of male and female respondent mostly men have
involved out of 100 respondent we took data from the 82% of male respondent and remaining
18% are female.

2) Percentage of your income you invest.

Table No: 2
Options Respondents %
None 8 8
Under 10% 34 34
5-10% 27 27
10-15% 12 12
Above 15% 19 19
Total 100 100
None Under 5% 5-10% 10-15% Above 15%
12% 8%
14%
34%
32%
Interpretation:
From the sample who took the questionnaire, individuals tend to invest less than 12%of their
income which is understandable in a growing country like India where so many people are below
the poverty line and struggle to make ends meet. The chart highlights the fact that only 5% of the
people invest 34 % of their income in various commodities or policies. May be if more of the
investors or higher income group were in the sample, the charts would give a different picture.

3) Where do you invest in trading?

Table no: 3
Equity/derivatives 23 23
Mutual funds 28 28
Commodity futures 29 29
Insurance ( include ULIP) 20 20
Total 100 100
20% 23%
Equity/derivatives
Mutual funds
29% 28% Commodity futures
Insurance ( include ULIP)
Interpretation:
From the sample who took the questionnaire, individuals are invest 31% in the mutual fund, 26%
individual of equity/derivatives and investment 23% of individual they only commodities future as it is
high risk. And 20% are investing in Insurance.

4). Why do you invest in trading?

Table no: 4
Awareness 34 34
Conservatism 24 24
Peer influence 25 25
Looking for assistance 17 17
Total 100 100
Awareness Conservatism Peer influence Looking for assistance
17%
34%
25%
24%
Interpretation:
From the sample who took the questionnaire individual tend to invest for the purpose of investment
awareness 34% .and thereafter 25% of individual go for peer influence .and remaining 17% of investors
looking for assistance that shows lack of knowledge of investors.

5). How do you rate your risk taking apatite?

Table no-5
Options respondents %
Risk seeking 25 25
Moderate 26 26
Risk adverse 28 28
No answer 21 21
Total 100 100
Risk seeking Moderate Risk adverse No answer
10% 18%
22%
50%
Interpretation:
Majority of the people in this world would thinks twice before investing their savings. Every
individual wants to increase his savings. As the chart show there are very few guys who take big
time risks related to their savings and investments. Most of them are risk averse and about 50%
of them come into the moderate category. The moderate ones do a detailed investigation before
investing and trading their savings.

6). What would you use commodity for?

Table no: 6
Options respondents %
Trading 31 31
Investing 25 25
Reasonable returns 30 30
No answer 14 14
Total 100 100
Trading Investing Reasonable returns No answer
14%
31%
30%
25%
Interpretation:
Trading is a direct exchange of goods and services. Trading can also refer to the action
performed by traders and other market agents in the financial markets. Commodities are most
often used in trading and in investment of products. Investing is the active redirection of
resources: from being consumed today, to creating benefits in the future; the use of assets to earn
income or profits. The use of commodities in trading and investment can result in huge profits in
the long term.

7). How would you prefer when trading in commodities?

Table no: 7
Trading 25 25
Midterm (1-3 months) 26 26
Short term (up to 1 month) 28 28
Long term (3-12 months) 21 21
Total 100 100
Trading Midterm (1-3 months)

Short term (up to 1 month) Long term (3-12 months)
21% 25%
28%
26%
Interpretation:
As per above chart show that trading of commodities prefer majority of trader are go for long
term , midterm scheme also moderate and mostly go for short term .

8). You prefer to invest in commodities (futures) that have?

Table no: 8
High risk, high return 31 31
Medium risk, medium return 40 40
Low risk , low return 29 29
Total 100 100
High risk, high return Medium risk, medium return Low risk , low return
29% 31%
40%
Interpretation:
People always want to invest in commodities where they have more than 50% chance of getting
a profit. Keeping the future in mind customers tend to invest in commodities which have medium
risk and medium return, rather than investing in high risk ones as it is a huge gamble. It might
pay off once in a while but it might result in ending all you saving as well.

9). Do you know investment in commodities can classed as an asset?

Table no: 9
Yes 53 53
No 47 47
Total 100 100
Yes No
47%
53%
Interpretation:
Commodities speculation is about the riskiest place to deploy your savings: it's really in a
different category than investing. 43% of investors do not know asset classed of commodities
53% of respondent are aware about trading classed.

10). In which of the following types of commodity do you prefer to invest .

Table no: 10
Options Respondent %
Bullions( gold and silver) 6 6
Metals (copper, lead, nickel Etc.) 25 25
Agri 20 20
Energy 22 22
Mixed 27 27
Total 100 100
Bullions( gold and silver) Metals (copper, lead, nickel Etc.)

Agri Energy
Mixed
6%
27%
25%
22%
20%
Interpretation:
As per above chart show that trading of commodities we took from questionnaire above chart
shows that mixed type of commodity more people invest i.e. 27% ,metal base commodity
invests 25% of investor. Remaining bullions, metals, agri etc.

11). If you trade in commodities, how do you rate it when compared to Equities on scale of
5?
Table no: 11
1 rating 15 15
2rating 18 18
3 rating 36 36
4 rating 22 22
5rating 9 9
Total 100 100
1 2 3 4 5
7%
33% 13%
20%
27%
Interpretation:
More than half of the sample trusts both commodities and equities for putting their Money in it.
Though commodities has started decades after which equity trading started, its growth is
tremendous with its turn over almost equal or more than equity tune over in today scenario.

12). Which of the following product prefer by you for your investment?
Table no: 12
Metals 24 24
Crops 41 41
Oil 19 19
others 16 16
Total 100 100
Metals Crops Oil others
16%
24%
19%
41%
Interpretation:
As per who took questionnaire above chart shows that prefer product for investment is crops
sectors are 41% of investment ,24% of investment in Oil and remaining metals,others .

13). Which type of trading you prefer to deal with?

Table no: 13
Square up mode arbitrage intraday 42 42
Hedging delivery based 58 58
Total 100 100
Square up mode arbitrage intraday Hedging delivery based
42%
58%
Interpretation:
As per who took questionnaire above chart is showing that trading dealing with majority of
investors is hedging delivery based and reaming investors deal with more in square up mode
Arbitrage intraday.

14). Which factors play a crucial role when you make a decision to invest in stock market?
Table no: 14
Risk reduction 19 19
Leverage Benefits 27 27
Speculative motive 29 29
Investment arbitrage Benefits 25 25
Total 100 100
Risk reduction
Leverage Benefits
Speculative motive
Investment arbitrage Benefits
25% 19%
27%
29%
Interpretation:
As per who took questionnaire we have selected 100 respondents above chart show that
decisions to invest in stock market .many investor decisions in stock market through the
speculative motive ,leverage benefits and investment arbitrage benefits Risk reduction .

15) Which exchange you prefer to deal with?

Table no: 15
MCX 45 45
NCDEX 55 55
Total 100 100
MCX NCDEX
45%
55%
Interpretation:
In India, there are two most popular exchanges to deal with trading 55% of deal with the multi
commodity exchange and above chart is showing that 45% of investors are deal with national
commodity and derivative exchange.

16). If you invest in stock market, where do you invest your savings?
Table no: 16
Equity 40 40
Derivatives 28 28
Commodity 32 32
Total 100 100
Equity Derivatives Commodity
32%
40%
28%
Interpretation:
In India there is mostly investment in equity based stock market ,very fewer investors is invested
money in commodity market and remaining investment in only derivative

17). Where do you invest your saving?

Table no: 17
Bank 10 10
Insurance 19 19
IPO 8 8
Mutual fund 13 13
Real assets 5 5
Gold/ silver 8 8
Post office 10 10
Govt. Bonds 11 11
stock 12 12
Total 100 100
Bank Insurance IPO Mutual fund Real assets

Gold/ silver Post office Govt. Bonds stock
13% 10%
12% 20%
10%
8%
8%
5% 14%
Interpretation: As per who took questionnaire above the chart shows that investor saving more in
insurance 20%, mutual funds in 14%,stock exchange in 13% ,bank in10% remaining post office,
gold/silver, govt. bonds etc.

PART-VI FINDINGS & SUGGESTIONS
FINDINGS
 The investors traded daily, weekly, monthly of the investor traded of enter into long term
contract the investor’s goal is diversification increase their wealth of the investor literacy level
about commodity future is average .the investor’s emotional risk tolerance level is moderately
conservative
 Equity market and currency market, commodity market fluctuation makes impact on Equity
market and currency market, online trading in commodity market is transparent and online
trading in commodity market is reliable.
 Most of salaried employed prefer to invest in private sector. Investor aware about various
investment avenues like Mutual fund, equity share, derivative, Lic, IPO, debenture, and
commodity market for the purpose of different tax benefits.
 Physical commodities have actively traded spot and derivative markets. Most commodities
are raw materials, basic resources, or agricultural products, such as iron ore, sugar, or rice.
SUGGESTIONS:
 Most of the investors are involved in short term trading. It indicates high risk involved in short
term trading than long term trading. In this case investor should maintain high rate of margin
money, avoid false recommendation and rumors. Instead they should take decisions on the basis
of technical analysis.
 Investor must show interest in steady and fast growth shares only.
 If Government takes this commodity market into awareness for the farmers, it would be better
for them to take their own decisions for commodity which they want to trade.
 Perception of investors in Government should increase the
 As there is an option for the trader to take the physical delivery, it would be better if the
Government cuts the tax rate for the physical delivery of goods.
 Avoid buying shares of the company which are not traded on your stock exchange.

BIBLIOGRAPHY
1. Donald E. Fisher, Ronald J. Jordan, Securities Analysis and Portfolio Management,, 1999,
sixth edition, futures and options Page no: 404-435,489,493. Prentice hall of India
2. Sharpe W.F. Alexander J. Bailey, investments, 1998, 5th edition, Derivatives, Prentice Hall
of India,
3. SCHAUM"S out lines, investments, 2nd edition, new chapters on future and options. Karvy
finapolies, Monthly editions, Broachers of karvy com trade.
WEBSITES:
KARVY LEARNING CENTRE

www.karvy.com
www.karvycommodities.com
www.ncdex.com
www.mcx.com
www.derivativesindia.com

QUESTIONNAIRES
ANNEXURE
(COMMODITY AS AN ASSET)
Note- (this questionnaire is used for educational purpose)
Name:
Age:
Education Qualification: (a) 12th (b) graduation (c) post graduation
Occupation:
(a) Salaried (b) Self Employed (c) Retired (d) others (If so, specify ----
1. Gender:
(a) Male (b) Female
2. Percentage of your income you invest?

(a) None (b) Under 5% (c) 5 to 10%
(d) 10 to 15% (e) Above 15%
3. Where do you invest?
(a) Equities/ Derivatives (b) Mutual Funds
(c) Commodity Futures (d) Insurance (Includes ULIP)
Others (If so, specify _____________
4. Why do you invest in trading?

(a) Awareness (b) Conservatism
(c) Peer Influence (d) Looking for assistance
5. How do you rate your risk taking apatite?

(a) Risk seeking (b) Moderate
(c) Risk Adverse (d) No Answer
6. What would you use commodities for?

(a) Trading (b) Investing
(c) Reasonable Returns (d) No Answer
7. How would you prefer when trading in commodities?
(a) Trading (b) Mid Term (1-3 months)

(c) Short-term (Up to 1 month) (d) Long Term (3-12 months

8. You prefer to invest in commodities (futures) that have?

(a) High Risk, High Return (b) Medium Risk, Medium Return
(c) Low Risk, Low Return
9. Do you know investment in commodities can be classed as an Asset?

(a) Yes (b) No
10. In which of the following types of Commodities do you prefer to invest
(a) Bullions (Gold and Silver) (b) Metals (Copper, Lead, Nickle etc.)
(c) Agri (d) Energy (e) Mixed
11. If you trade in commodities, how do you rate it when compared to Equities on a Scale of 5?
1 2 3 4 5
Less Better
12. Which of the following product prefer by you for your investment?
(a)Metal (b) Crops (c) Oil Bullions if others, please specify _____
13. Which type of trading you prefer to deal with?

(a)Square up mode Arbitrage Intraday (b) Hedging Delivery based
14. Which factor plays a crucial role when you make a decision to invest in stock Market?
(a)Risk Reduction (c) Leverage Benefit
(b) Speculative Motive (d) Investment Arbitrage Benefit
15. Which exchange you prefer to deal with?

(a)MCX (b) NCDEX
16. If you invest in stock market, where do you invest your savings?
(a)Equity (b) Derivatives (c) Commodity
17. Where do you invest your saving?

(a)Bank (b)Insurance (c) IPO
(d)Mutual Fund (e) Real Assets (f) Gold/Silver
(g) Post Office (h) Govt. Bonds (i) Stock
Thank you

Commodity trading analysis at karvy

COMMODITIES Trading Analysis at Karvy

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COMMODITIES Trading Analysis at Karvy

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Commodity Trading Analysis at Karvy

The commodities that are traded today are:

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OBJECTIVES OF THE STUDY

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 The National Commodities and Derivatives Exchange Ltd. (NCDEX)

National Commodity & Derivatives Exchange Limited (NCDEX)

Forward Market Commission regulates NCDEX in respect of futures trading in commodities.

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Multi Commodities Exchange of India Ltd . MCX an independent and de-

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Gold, Gold HNI, Gold M, I-Gold, Silver,

Cardamom, Jeera, Pepper, Red Chilli,

Cotton Long Staple ,Cotton Medium Staple,

Chana, Masur, Tur, Urad, Yellow Peas

Basmati Rice, Maize, Rice, Sarbati Rice,

Brent Crude Oil, Crude Oil, Furnace Oil

plantation Cashew Kernel, Rubber

Petro chemical High Density Polyethylene (HDPE),

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The National Multi Commodity Exchange of India ltd.

The first state-of-the-art de-mutualized multi-commodity Exchange, NMCE commenced futures

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Commodity price index

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Complexity and interconnectedness of global market

2.3 International and National scenario

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Karvy Data Management Services LTD

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 Among the to top 3 Depository Participants

2.1 BACKGROUND AND INCEPTION OF THE COMPANY

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2.2 NATURE OF THE BUSINESS CARRIED OUT

2.3 VISION, MISSION AND QUALITY POLICY

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2.4 PRODUCT/SERVICES PROFILE

 EQUITY BROKING SERVICES

 DISTRIBUTION OF FINANCIAL PRODUCTS

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 WEALTH MANAGEMENT SERVICES

2.5 AREA OF OPERATION – GLOBAL/NATIONAL/REGIONAL

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2.6 ORGANIZATIONAL STRUCTURE

Website Management Team General Management Team

Web Information Manager (M. Sreejith) Managing Director (C. Parthasarathy)

Web Supervisor (Umesh T)

Head IT - Software Development

Chief Information Security Officer

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2.7 OWNERSHIP PATTERN

Mr. M Yugandhar, Managing Director is a founder member of the KARVY Group. He is a

Mr. G. Krishna Hari

2.8 INFRASTRUCTURAL FACILITIES

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2.9 FINANCIAL CONDITION

3.0 ACHIEVEMENT AWARD

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PART-III LITERATURE SURVEY

CONCEPTUAL AND THEORETICAL REVIEW

There are 4 types of Derivatives instrument:

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 It is a bilateral contract and hence is exposed to counter-party risk.