Analysis of Commodity Market With Capital Market

8/6/2019 Analysis of Commodity Market With Capital Market

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Analysis of commodity market with capital market

PART A

INTRODUCTION

INDUSTRY PROFILE

Introduction

Stock exchanges to some extent play an important role as indicators, reflecting the

performance of the country's economic state of health. Stock market is a place where securities

are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within minutes

and are determined by the demand and supply of stocks at a given time. Stock brokers are the

ones who buys and sells securities on behalf of individuals and institutions for some commission.

The Securities and Exchange Board of India (SEBI) is the authorised body which regulates the

operations of stock exchanges, banks and other financial institutions. The past performances in

the capital markets specially the securities scam by Harshad Mehta has led to tightening of the

operations by SEBI. In addition the international trading and investment exposure has made it

imperative to better operational efficiancy.

COMPANY PROFILE

About KARVY

The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the top

player in almost all the fields it operates. Karvy Computer share Limited is Indias largest

Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate, managing over

2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India

and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6,

00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with

NSDL and CDSL. Karvy COM trade, Member of NCDEX and MCX ranks among the top 3

commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA

and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate

Agent, Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores under

management. Karvy Realty Services, which started in 2006, has quickly established itself as a

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broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to

clients in the US.

Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York.

Over 9,000 highly qualified people staff Karvy.

Karvy Early Days

Karvy the name comes from the names of the directors:

K - Mr. V. Kutumba Rao

A - Mr. K Ajay Kumar

R - Mr. M S Ramakrishna

V - Mr. Vikram Singh

Y - Mr. M Yugandhar

The birth of Karvy was on a modest scale in 1979. It began with the vision and enterprise of a

small group of practicing Chartered Accountants who founded the flagship company Karvy

Consultants Limited. Karvy started with consulting and financial accounting automation, and

carved inroads into the field of registry and share accounting by 1985. Since then, Karvy have

utilized its experience and superlative expertise to go from strength to strengthto better its

services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one of

Indias premier integrated financial service enterprise.

GROWTH AND DEVELOPMENT OF KARVY

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 Karvy have

made this journey by taking the route of quality service, path breaking innovations in service,

versatility in service and finallytotality in service. Karvys highly qualified manpower,

cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for

Karvy the position of an emerging financial services giant enjoying the confidence and support

of an enviable clientele across diverse fields in the financial world.

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NATURE OF WORK

In India capital markets are experiencing radical reformation. The stricter regulatory

framework along with introduction of information and technology has added more

professionalism to the industry. The most common areas of work in the capital markets, one can

look forward to include the following.

STOCK BROKERS:

Given the present complex situation of our capital markets, stock brokers have to face

challenging tasks. The specialized knowledge and professional acumen required has made the

job of brokers highly skillful. The work of stock brokers depends upon the kind operations they

engage themselves into. Some of the brokers like to practice with individual clients while others

work for institutions. Brokers who work for institutional investors are often called securities

traders.

INVESTMENT ANALYSTS:

Investments in todays capital markets is not something which can always fructify, based

on mere guesses. It requires thorough scientific research and analysis to make something out of

it. Investment analysts are those who carry out the very same job and help fund managers

manage their investments. They can work as stock broking analysts or as institutional analysts.

The expertise and experience, though it varies from individual to individual, in the subject of

capital markets makes them suitable to handle high value investment decisions of merchant

banks, insurance and pension funds and other financial institutions.

EQUITY ANALYSTS:

Investment markets all over the world are witnessing major changes. Indian markets

are no exception. The amount of professionalism and complexity of financial markets has led to

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the adoption of most advanced techniques and approach while dealing in securities. Increasing

presence of both domestic and foreign players in the Indian markets has further added to the

demand for having a more systematic approach. Therefore arose the need for professionals who

can specialize in the fields of capital markets. Equity analyst is one such specialist who does

research and helps in systematic and better financial investments. Given the prevailing market

conditions, equity analysts are in for favorable times ahead. There work is quite similar to that of

investment analysts.

PERSONALITY

To deal and attend to different kinds of people is something which everybody cannot

handle with ease and tact. As brokers' job includes handling similar situations, they need to havea well groomed personality and a knack to convince people. Patience is something; they cannot

afford to lose as it can adversely affect their clientele. Good communication skills also count

when dealing with a variety of people.

Technical aspects of the job of brokers, investment and equity analysts are almost similar

and ask for sharp memory, analytical mind, foresight and logical approach to make projections,

ability to withstand mental stress and handle complex situations as capital markets are highly

susceptible to ups and downs.

CAREER PROSPECTS

Capital markets in India are going through major reform phase. Initiatives taken by SEBI

in the direction to discipline, reform and bring greater transparency in the markets has had

positive effect on the performance. Foreign institutional investors, mutual funds and even

individuals have once again started posing confidence in the capital markets. This has enhanced

prospects for brokers, investment and equity analysts. Even otherwise also, economic growth andliberalisation taking place in the country has opened number of opportunities in various

organisations like mutual funds, investment consultancy, broker firms, insurance companies,

merchant banks, pension funds and other financial institutions. They can also start their own

consultancies. The present scenario definitely speaks positive of the future of this industry.

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1. Karvy Consultants Limited.

2. Karvy Investors Services Limited.

3. Karvy Stock Broking Limited

4. Karvy Commodities Broking Private Limited

5. Karvy Global Services Limited

6. Karvy Computer share Private Limited.

KARVY CONSULTANTS LIMITED

As the flagship company of he Karvy Group, Karvy Consultants Limited has always

remained at the helm of organizational affairs, pioneering business policies, work ethic and

channels of progress.

Having emerged as a leader in the registry business, the first of the businesses that we

ventured into, we have now transferred this business into a joint venture with computer share

limited of Australia, the worlds largest register, with the advent of depositories in the Indian

Capital market and the relationships that we have created in the registry business, we believe that

we were best positioned to venture into this activity as a Depository Participant. We were one of

the early entrants registered as Depository Participant with NSDL (National Services DepositoryLimited), the first Depository Participant with CDSL (Central Depository Services Limited).

Today, we service over 6 lakhs customer accounts in his business spread across over 250

cities/towns in India and are ranked amongst the largest Depository Participants in the country.

With a growing secondary market presence, we have transferred this business to Karvy Stock

Broking Limited (KSBL), our associate and a member of NSE, BE and HSE.

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KARVY INVESTORS SERVICES LIMITED

Member national stock exchange stock exchange (NSE), the Bombay stock exchange

(BSE), and the Hyderabad Stock Exchange (HSE).

Recognized as a leading merchant banker in the country, we are registered with SEBI as a

category I merchant banker. This reputation was built by capitalizing on opportunities ion

corporate consolidations, mergers and acquisitions and corporate Restricting, which have earned

us the reputation of a merchant banker, raising banker, raising resources for corporate of

Government undertaking successfully over the past two decades have given us the confidence to

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Board of

Directors

CMD, MD, & other

Directors

Karvy

Consu

ltants

Limite

d

Karvy

Investor

Service

Limited

Karvy

Global

Service

Limited

Karvy

Stock

Broking

Limited

Karvy

Computers

hare Pvt.

Limited

Karvy

Insurance

Broking

Private

Limited

Karvy

Inc.

Karvy

Commoditie

s Broking

Private

Limited

Karvy Regional

HQs / Branches


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Renew over focus in this sector Our quality professional team and our work oriented

dedication have propelled us to offer value added corporate financial services and act as a

professional navigator for long team growth of our clients, who include leading corporate, state

governments, goring institutional investors, public and private sector companies and banks in

Indian and global Markets. We have also emerged as trailblazer in the arena of relationships,

both at the customer and trade levels because of our unshakable integrity, seamless service and

innovative solutions that are tuned to meet varied needs. Our team of committed industry

specialists, having extensive experience ion capital markets, further nurtures relationship.

KARVY STOCK BROKING LIMITED

Karvy stock Broking Limited, one of the cornerstones of the karvy edifice, flows freelytowards attaining diverse goals of the customer through varied services. Creating a plethora of

opportunities for the customer by opening up investment vistas backed by research based

advisory services. Here growth knows no limits and success recognizes no boundaries. Helping

the customer create waves in hi portfolio and empowering the investor completely is the ultimate

goal.

KARVY COMMODITIES BROKING PIVATE LIMITED

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 specific investment option.

Here we enabled 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 infrastructure 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 for most 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

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strategies to perfection. Every move made is a calculated one, based on reliable research that is

coveted into Vlasic information through daily, weekly and monthly newsletters calls and

intraday alerts further personalized service is provided here by dedicated team committed to

giving hassle free service while the brokerage rates offered are extremely competitive.

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,

manufactures and the Government of India itself.

STOCK BROKING SERVICES

It is an undisputed fact that the stock markets unpredictable and yet enjoys a high success

rate as a wealth management and wealth accumulation option. The difference between

unpredictability and a safety anchor in the market is provided by in depth knowledge of market

functioning and changing trends, planning with foresight and choosing ones options wit care.

This is what we provide in our stock broking services.

We offer services that are beyond just a medium for buying and selling stocks and shares.

Instead we provide services, which are multi dimensional and multi-focused in their scope.

There are several advantages in utilizing our stock broking services, which are the reason why it

is one of the best in the country.

We offer trading on a vast platform National Stock Exchange, Bombay Stock Exchange

and Hyderabad several risk factors risk factors and planning accordingly. We are assisted in this

Tasaki by our in depth research, constant feedback and sound advisory facilities, our highly

skilled research team, comprising of technical analysis as wells as fundamental specialists,

secure result oriented information on market trends, market analysis and market predictions,

this crucial information is given as a constant feedback to our customer through daily reports

delivered thrice daily the pre-session report, where market scenario for the day is predicted.

The mid-session report, timed to arrive during lunch break, where the market forecast for the rest

of the day is given and the post session report, the final report for the day, where the market

and the report of the day is reviewed. To add to the repository of information, we publish a

monthly magazine Karvy the Finapolis, which analyzed the latest stock market trends and

takes a close look a the various investment options, and products available in the market, while a

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weekly report, called Karvy Bazaar Baatein, keeps you more informed on the immediate

trends in the stock market. In addition, our specific industry reports give comprehensive

information on various industries, besides this, w also offer special portfolio analysis packages

that provide customized advisory services to help you make the right financial moves that are

specifically suited to your portfolio.

DEPOSITORY PARTICIPANTS

The onset of the technology revolution in financial services industry saw the emergence

of Karvy as an electronic custodian registered with National securities depository Ltd., (NSDL)

and Central securities Depository Ltd., (CSDL) in 1998. Karvy set standards enabling further

comfort to the investor by promoting paperless trading across the country and emerged as the top3 depository particulars in the country in terms of customer serviced.

Offering a wide trading platform with a dual membership at both NSDL and CDSL We

are a powerful medium for trading and settlement of dematerialized shares. We have established

live DPM, internet access to accounts and an easier transaction process in order to offer more

convenience to offer more convenience to individual and corporate investors, a team of

professional and the latest technology expertise allocated exclusively to our demat division

including technology expertise allocated exclusively to our demat division including

technological enhancement like SPEED e, make our response time quick and our delivery

impeccable. A wide national network makes our efficiencies accessible to all.

DISTRIBUTION OF FINANCIAL PRODUCTS

The paradigm shift from pure selling to knowledge based selling drives the business

today. With our wide portfolio offerings, we occupy all segments in the retail financial services

industry.

A 1600 team of highly qualified and dedicated professional drawn form the best of

academic and professional backgrounds are committed to maintaining high levels of client

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service delivery. This has propelled us to a position among the top distributors for equity and

debt issues with an estimated market share of 15% in terms of application mobilized, besides

being established as the leading procure in all a public issues.

To further tap the immense growth potential in the capital markets we enhanced the scope

of our retail brand, Karvy the Finapolis, thereby providing planning and advisory services to

the mass affluent. Here we understand the customer needs and lifestyle n the context of present

earnings and provide adequate advisory services that will necessarily help in creating wealth.

Judicious planning that is customized to meet the future needs of the customer, deliver a service

that is exemplary. The market savvy and the ignorant investors, both find this service very

satisfactory. The edge that we have over competition is our portfolio of offerings and our

professional and our professional expertise. The investment planning for each customer is done

with an unbiased attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up dated market information on market

trends, investment options, opinions etc., thus empowering the investor to base every financial

move on rational thought and prudent analysis and embark on the path to wealth creation.

ADVISORY SERVICES

Under our retail brand Karvy the Finapolis, we deliver advisory services to a cross

section of customers. The service is backed by a team of dedicated and expert professional with

varied experience and background in handling investment portfolio. They are continually

engaged in designing the right investment portfolio in handling investment portfolio for each

customer according to individual needs and budget consideration with a comprehensive support.

System that focuses on trading customers portfolio and providing valuable inputs,

comprehensive support system that focuses on trading customers portfolios and providing

valuable inputs monitoring and managing the portfolio through varied technological initiatives.

RESEARCH PRIVATE CLIENT GROUP

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This specialized division was set up to cater to the high net worth individuals and

institutional clients keeping in mind that they require a different and kind of financial planning

and management that will augment not just existing finances but their life style as well. Here

we follow a hard nosed business approach with the soft touch of dedicated customer care and

personalized attention.

For this purpose we offer a comprehensive and personalized service that encompasses

planning and protection of finances, planning of business needs and retirement needs and a host

of other services, all provided on a one to one basis.

Our research reports have been widely appreciated by this segment. The delivery and

support modules have been fine tuned by giving our clients access to online portfolio

information, constant updates on their portfolios as well as value added advise on portfolio

churning, sector switches etc., the investment recommendations given by our research team in

the cash market has enjoyed a high success rate.

KARVY GLOBAL SERVICES LIMITED

The Specialist Business Process outsourcing unit of the Karvy Group. The legacy of

expertise and experience in financial services of the Karvy Group serves us well as we enter the

Global arena with the confidence of being able to deliver and deliver well.

Here we offer several delivery models on the understanding that business needs are

unique and therefore only a customized service could possibly fir the bill. Our service matrix

has permutations and combinations that create several options to choose from.

Be it re-engineering and managing process or delivering new efficiencies, our service

meets up to the most stringent of international standards. Our outstanding models are designed

for the global customer and are backed by sound corporate and operations philosophies, and

domain expertise. Providing productivity improvements, operational cost control, cost savings,

improved accountability and a whole grant of other advantages.

We operate in the core market segments that have emerging requirements for specialized

services. Our wide vertical market coverage includes banking financial and insurance services

(BFIS), Retail and merchandising, leisure and Entertainment, Energy and Utility and Healthcare.

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Our Horizontal offerings do justice to our stance as a comprehensive BPO unit and

include a variety of services in Finance and Accounting Outsourcing operations, Human

Resource Outsourcing operations, research and Analytics Outsourcing operations and insurance

Back Office Outsourcing Operations.

KARVY COMPUTER SHARE PVT.LTD.

We have wide spaces to tie up with the worlds largest transfer agent, the leading

Australian Company, Computer share Limited. The company that services more than 75 million

share holders across 7000 corporate clients and makes its presence felt in over 12 countries

across 5 continents has entered i9nto a 50 50 joint venture with us.

With our management team completely transferred to this new entity, we will aim to entice the

financial services industry than before. The future holds new arenas of client servicing and

contemporary and relevant technologies as we are geared to deliver better value and foster bigger

investments in the business. The worldwide network of Computer share will hold us in good

stead as we expect to adopt international standards in addition to leveraging the best of

technologies from around the world.

Excellence has to be the order of the day when tow companies with such similar ideologies of

growth, vision and competence, get together.

MUTUAL FUND SERVICES

We have attained a position of immense strength as a provider of across the board

transfer agency services to AMCs, Distribution and investors.

Nearly 40% of the top notch AMCs including prestigious clients like deutsche AMC

and UTI swear by the quality and range of services that we offer. Besides providing the entire

back office processing, we provide the link between various mutual funds and the investor,

including services to the distributor, the prime channel in this operation.

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Carrying the Limitless ideology forward. We have explored new dimensions in every

aspect of Mutual Fund servicing right from volume management, cost effective pricing, and

delivery in the least turnaround time, efficient back office and from office operations to

customized service. We have been with the AMCs every step of the way, helping them serve

their investors better by offering them a diverse and customized range of services. The first to

market approach that is our anthem has earned us the reputation o an innovative service

provider with a visionary bent of mind.

OUR ALLIANCES

Karvy Computer share Private Limited is a 50:50 joint venture of Karvy Consultants

Limited and Computer share Limited, Australia. Computer Share Limited is Worlds Largestand only global share registry, and a leading financial market services provider to the global

securities Industry.

The joint venture with Computer share, reckoned as the largest registrar in the world,

servicing over 60 million shareholder accounts for over 7,000 corporations across eleven

countries spread across five countries. Computer share manages more than 70 million

shareholder accounts for over 13,000 corporations around the world.

Karvy Computer share Private Limited, today, is Indias registrar and share transfer agent

servicing over 300 corporate and mutual funds and 16 million investors.

C) Karvy Services

1) IT enabled services

2) Stock Broking Services

3) Depository Participant

4) Advisory Services

5) Merchant Banking

6) Karvy As An Investment Banker

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7) Management of Capital Issues

8) Management of Buybacks and Take-avers

9) Private Placement of Debt and Equity

10) Mergers and Amalgamations

11) Karvy in Loan Syndications

12) Karvy Insurance Broking Pvt. Ltd.,

13) Computer share Pvt Limited

14) Mutual Fund Services

15) Corporate Shareholder Services

AREA OF OPERATION:

Karvy Ltd is Indias leading online retail broking house.It has international presence

(Usa ,soudiarebia and australia) with over 1000 outlets serving 10,70,000 customers across 400

cities. Karvy offers services like Portfolio Management, trade execution in equities, futures &

options, commodities and distribution of mutual funds, insurance and structured products.Karvy

is the retail broking arm of SSKI, securities pvt ltd. SSKI owns 56% in Karvy, balance

ownership is

OWNERSHIP PATTERN:

KARVY, Indias leading stockbrokers the real arm of SSKI, an Organization with

over eight decades of stock market experience. With more than 175 share shops in over 80 cities,

and a presence on internet throughOnline Share Trading Portal India, Stock

Brokers Company India, Indias premier online trading destination.

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http://www.sharekhan.com/http://www.sharekhan.com/http://www.sharekhan.com/http://www.sharekhan.com/http://www.sharekhan.com/http://www.sharekhan.com/


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Competitor information:

1. Bajaj Capital

It was established in 1964 at Delhi. In 1965 it innovates a new financial instrument

Companies Fixed Deposits and becomes the first company to raise Fixed Deposits. The

objective of company is to provide professional guidance to investors on where, when and how

to invest and to assist the corporate sector in its resource raising activities. Bajaj Capital became

the first company to set up Investment Centers all over India for this purpose. Today, Bajaj

Capital has 90 offices in over 40 important Indian Cities and has a team of around 500

employees nationwide.

2.MCS Ltd.

It is established in 1985 in Delhi. It is one of the largest Data Processing House employing

more than 600 people.

Volumes Handled

Share registry activities for over 100 corporate servicing over 10 million investors.Mutual

fund operations for 25 funds, servicing over 4.5 million investors.Billing & settlement plan for

Indian operations of IATA Geneva for 1.2 million tickets per annum covering (26 airlines & over

1200 agents).

Services Offered:

Registrars and Transfer Agents

Registrars to IPOs /Right Issues

Registrars to Open Offers

Registrars to Mutual Funds

Data Processing for Airlines

Print Shop Services

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MCS is a major player in these activities in the Country with a market share of about 25%. MCS

today provides these services to over 140 Corporate and Mutual Funds for a total investor base of

15 million.

3. N.J.India Investments Pvt. Ltd.

NJ India Invest (formerly known as NJ Capital stocks) was started in 1994 to cater to the

growing financial services sector. NJ India Invest evolved out as a client focused need based

investment advisory firm. NJ regards mutual fund as one of the best investment avenue available

to satisfy any kind of investment need.

4. ICICI Securities Ltd.

ICICI Securities Limited (i-SEC) is a wholly owned investment-banking subsidiary of

ICICI Limited. ICICI is the only non-Japanese Asian financial institution to be listed on the

New York Stock Exchange (NYSE). ICICI Securities was formed on 22nd Feb. 1993, when

ICICI's Merchant Banking Division was spun off into a new company; ICICI Securities today is

India's leading Investment Bank and one of the most significant players in the Indian capital

markets. ICICI Brokerage Services Limited (IBSL) set up in March 1995; IBSL is a 100%

subsidiary of i-SEC. It commenced its securities brokerage activities in February 1996 and isregistered with the National Stock Exchange of India Limited and The Stock Exchange,

Mumbai. ICICI has started a website ICICIdirect.com which is the most comprehensive website,

which allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other

financial products. ICICI has a large network of branches all over India.

Services offered:

Merchant Banking

Demat Service

Stock Broking

5. HDFC

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http://www.icici.com/http://www.icici.com/http://www.icici.com/


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HDFC is the leading financial company in India. IT has large network of branches all over

India. HDFC Securities which is fully subsidiary of HDFC provides demat service. HDFC and

its subsidiary provides following services.

Demat Service

Life Insurance

Banking Service

Housing Finance

Vehicle Finance

Education Loan

Personal Loan

Mutual Fund

6. Kotak Securities Ltd.

Kotak Securities needs no introduction as one of the largest stock broking houses in the

country and a leading distributor of primary market offerings. Kotak Securities limited is a joint

venture between Kotak Mahindra Bank and Goldman Sachs, the international investment

banking and brokerage firm. Kotak Securities is a corporate member of both the BSE and the

NSE. It is also a depository participant with the National Securities Depository Limited (NSDL)

for trading and settlement of dematerialized shares.

Services offered:

Stock Broking

Financial Product Distribution

Demat Services

Investment Advisory Service.

INFRASTRUCTURAL FACILITY:

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Vehicle parking facility for client and employee

Free statement of account through mail

Facility of separate computer is being given each staff

Printer and phone facility to all branches

All branches are computerize

ACHIEVEMENTS:

Largest mobiliser of funds as per PRIME DATABASE

Among the top 5 stock brokers in India (4% of NSE volumes)

India's No. 1 Registrar & Securities Transfer Agents)

A Category- I -Merchant banker.

Among the two top 3 Depository Participants

Largest Network of Branches & Business Associates

First ISO - 9002 Certified Registrar in India

Among top 10 Investment bankers

Work flow diagram:

The work flow model starts with giving information to the customer regarding securities,

stock market , investing in shares, their benefits etc.

The applications of the investors will be screened in order to ensure the financial

efficiency and trust worthiness of the customers.

The customers who will possess all the required qualification are allowed to open an account.

The essentials to open an account are as follows

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Bank account with check book.

Permanent account number {PAN card}

The investor who want to invest in stocks has to open demat account and trading account.

Demat account is the dematerialization of shares that is instead of keeping shares in the physical

form investor can have it in the electronic form.

Trading account refers to investor account opened to maintain his share holdings and his

transaction.

As soon as an investor open a demat account, the company will give an investor id which

will help him to carry out trading in a separate account.

The investors who are willing to trade off line, the companys employees will trade on behalf of

them.

The investors who are willing trade by themselves will be given software which will

support trading and he will be trained by the company regarding trading.

The company will give regular information regarding the market movements and the

guidelines to the investors based on their preferences.

The company will be having a group of security analysts who will be having constant eye on

market and analyze each companys performance based on

Fundamental analysis

Technical analysis

According to their study they will give suggestions to the investors for buying and selling of

shares.

The securities will be bought and sold on behalf of investors in case of offline trading.

The generally preferred method is to buy a companys share on bad news and sell it

during good news.

T+2 days refer to the settlement of account on trading day + 2 days. In case of purchase

of the shares the shares will be transferred to the investors account on that day, or in

case of selling of shares the amount will be transferred

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FUTURE GROWTH AND PROSPECTUS:

From the last decade because of globalization, liberalization Indian economy is

considerably developing and also providing new business opportunities

Increasing client strength

provide better client service

Continue up gradation of skill by imparting training to the staff

To introduce new product and service

Enhancing the business expansion into new geographical area by setting new

Branches

Beating the competition

FUNCTIONAL DEPARTMENTS OF KARVY

In Karvy the functions are mainly divided into two parts namely Operational Functions

and the Supporting Functions.

OPERATING FUNCTIONS:

Registry and Investor Services (RIS) in which Karvy carry out functions as Registrar

& transfer Agent (RTA), and Registrar to the Issues. Financial Product Distribution (FPD),

Here financial products include Mutual Funds, Fixed income securities, bonds, fixed deposits,

Tax-saving Products, Insurance, etc. Stock Broking Services and Depository Participant (DP),

which are explained in Service Profile of the Karvy group of companies.

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SUPPORTING FUNCTIONS:

Administration - Purchase and Stores Department

Responsibilities

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HODAssistant

HOD

Administrati

on Team


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To ensure preventive breakdown of equipment/accessories including computer hardware

To ensure speedy breakdown maintenance

To ensure that the maintenance status of all equipment/ accessories is entered in the

service

To ensure that the maintenance is carried out efficiently

Maintenance includes preventive, breakdown and general maintenance. Preventive

maintenance shall be done as per the prefixed time schedule by the subcontractors for the

purpose. The administration in charge shall make necessary arrangements for this purpose.

Accounts Department

Finance operations in Karvy are centralized at the Head Office Account. Periodic fund

requirement at the regional level will be sort as and when required. But all cheques and such

instruments would be signed by the local regional manager.

System Administration Department

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In this department the functions include Trouble shooting, desktop queries, Network problems,

Software and Hardware problems, Installation of new systems, creating new networks.

Mc KINSEYS 7S MODEL

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Dy. General

Manager

Dy.ManagerAsst. Manager


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STRATEGY:

In modern times the word strategy has found its way into the management field. In the

context of a business concern, strategy indicates specific program of action for achieving the

organization objectives by employing the firms resources efficiently and economically. It

involves preparing oneself for meeting unforeseen factor. It is also concerned with meeting the

challenges posed by the policies and actions of other competitors in the market.

STRUCTURE:

Board of Directors

Mr. C Parthasarathy (Chairman and Managing Director), Mr. M Yugandhar (Managing

Director ), Mr. M S Ramakrishna (Director ), Mr. Prasad V Potluri (Director), William Stuart

Crosby (Chairman Karvy Computer share Pvt Ltd.), Chandra Balaraman(Director Karvy

Computer share Pvt Ltd.), Mark Davis(Director Karvy Computer share Pvt Ltd.), Mr. Uday

Raval(Director - Karvy Inc. )

Karvys organization structure can be viewed as accomplishing departments Operations

Divisions and Support Function Division.

Below the Operations Divisions there are sub divisions namely Registry and Investor Services

(RIS), Depository Participant (DP), Broking Services, Financial Product Distribution (FPD).

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Below the Support Functions, there are sub divisions namely Accounts, System, Human

Resource Development, and Administration, Purchase & Stores.

SYSTEM:

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, IPOs.

A link called Resource Center, devoted solely to research. Karvys highly skilled research

team, comprising of technical analysts as well as fundamental specialists, secure result-oriented

information on market trends, market analysis and market predictions. This crucial information isgiven as a constant feedback to its customers, through daily reports delivered thrice daily; The

Pre-session Report, where market scenario for the day is predicted, The Mid-session Report,

timed to arrive during lunch break, where the market forecast for the rest of the day is given and

The Post-session Report, the final report for the day, where the market and the report itself is

reviewed. To add to this repository of information, Karvy publish a monthly magazine The

Finapolis, which analyzes the latest stock market trends and takes a close look at the various

investment options, and products available in the market, while a weekly report, called Karvy

Bazaar Baatein, gives more information on the immediate trends in the stock market. In addition,

its specific industry reports give comprehensive information on various industries.

STYLE:

An activity like forecasting and planning are made by top level managers. Major policies

and plans are made by top management and it is implemented and administered by employees. In

the organization the style of informal communication and meetings with employees has created

workers to a friendly environment.

STAFF:

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The term staff refers to manpower planning, recruitment, performance appraisal,

motivation and morale.

SKILLS:

The managers and workers in each department are skilled to the extent of functions they

perform. Directors of the company are skilled in every activities and disciplines of organization.

A 1600 team of highly qualified and dedicated professionals drawn from the best of academic

and professional backgrounds are committed to maintaining high levels of client service

delivery. This has propelled Karvy to a position among the top distributors for equity and debt

issues with an estimated market share of 15% in terms of applications mobilized, besides being

established as the leading procurer in all public issues.

A link called Resource Center, devoted solely to research. Karvys highly skilled research

team, comprising of technical analysts as well as fundamental specialists, secure result-oriented

information on market trends, market analysis and market predictions.

SHARED VALUES:

Employees at each level of organization are conscious about delivering customer value for

his money. Each and every employee understands the mission and vision of the company.

Employees of company are committed towards the quality aspects in service. The employees of

Karvy themselves put forward in fulfilling the organizational principles for betterment of

organization

SWOT ANALYSISSTRENGTHS

1. It is located in a place where good infrastructure is available.

2. The company is concentration towards the quality of the products.

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3. The technological standard of the company.

4. The co-operative principal, which has laid the foundation of the company.

5. Certificate like ISO9002

WEAKNESS1. The company needs improvement and should concentrate on timely customer service.

2. The promotion procedure in the organization is too rigid.

3. The company has to focus more on sales.

OPPURTUNITIES

1. Since karvy has a well known brand, it has opportunity to diversify in to other business.

2. It has got infrastructure to expand the product and services.

THREATS

1. Stiff competition from other stock brokers

LEARNING EXPERIENCE

Karvy has a vast variety of products and services and providing good services to customers

and I came to know about commodity and capital market in detail. And how to make trading.

During the conduct of survey I have studied lot about differint market like commodity and

capital and also came to know about clients behavior towards trading point of view.

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So I got overall knowledge regarding commodity and securities market and I came to know

about fluctuations of different companys shares and different commodities.

I learnt more about different commodities and securities and I came to know about

commodities which were traded at the stock exchange of market index.

Commodities market essentially represents another kind of organized market just like the

stock market and the debt market. However, commodities market, because of its unique nature

lends to the benefits of a wide spectrum of people like investors, importers, exporters, producers,

corporate, etc.,

Commodity Exchanges (MCX and NCDEX) function from 10.00 Am to 11.30 PM with a

break of 30 minutes between 5.00 PM and 5.30 PM. However some specific commodities with

strong international price linkages (such as Gold, Silver, Soy oil, Crude Oil etc) are allowed to be

traded after 8.00 PM.

Commodity prices are generally less volatile than the stocks and this has been statistically

proven. Therefore it's relatively safer to trade in commodities

The securities market has two interdependent and inseparable segments, the new issues

(primary market) and the stock (secondary) market. The primary market provides the channel for

sale of new securities while the secondary market deals in securities previously issued. The price

signals, which subsume all information about the issuer and his business including associated

risk, generated in the secondary market, help the primary market in allocation of funds. The

issuers of securities issue (create and sell) new securities in the primary market to raise funds for

investment and/or to discharge some obligation.

Stockprices change every day by market forces. By this we mean that share prices change

because ofsupply and demand. If more people want to buy a stock (demand) than sell it

(supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it,

there would be greater supply than demand, and the price wouldfall.

Understanding supply and demand is easy. What is difficult to comprehend is what makes people

like a particular stock and dislike another stock. This comes down to figuring out what news is

positive for a company and what news is negative

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Investors are looking to put their money in assets which give decent returns even if the

stock markets are tumbling. For example, the value of a piece of art may rise if the inflation is on

the rise irrespective of the performance of stock markets.

PART-B

TITLE OF PROJECT

A study on Analysis of commodity market with capital market

STATEMENT OF THE PROBLEM

To know the comparisons between commodity and capital market at the trading point of

view.and also to analyise which is the best investment alternative.

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In the past few years of the commodity and security market in India, little has been done

to educate and familiarize people with these products by the concerned institutions. With the

increase in liquidity in this market, the benefits of hedging risk using commodity and security

could be fully enjoyed by the investors, fund managers etc., resulting in a safe and secure market

place. A major need for accomplishing this at this juncture is to increase investors awareness

and education. The potential loss that could arise due to the volatility of securities market also

needs to be explained to those who use commodities for appreciation of the benefits of the

market.

DESIGN OF THE STUDY:

OBJECTIVE OF THE STUDY:

The objectives of this study can be divided into

Primary objective

Comparison of commodity market with capital market

Secondary objective

To know the risk involved in different market.

To know the investment patterns of the investors in commodity and capital market.

To know the awareness of customers towards commodity and capital market

SCOPE OF THE STUDY:

The problem stated by karvy is to make comparison between commodity and capital

market and investment patterns of the High Net-worth Individual investors (HNIs) in Haveri.

The study undertaken is the analysis of the different market and investment pattern ofIndividuals where various independence variables are studied so as to know which variable or

variables can go a long way in explaining the investment preferences of the targeted respondents

of this high potential market. It also urges to know the current market trend and competitors

performance vis--vis karvy share market.

METHODOLOGY OF DATA COLLECTION

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Primary data was collected from 100 respondents using a schedule of questions

Secondary data was collected mainly from the Internet, printed journals on the capital markets

of India and commodity market, newspaper articles and books written on the Indian stock

markets

LIMITATIONS

While completing this study, there were some constraints. They were:

Sample size: Due to constraints on time, the sample size had to be limited at 100.

This, by and large, may not represent the entire community of the Indian investor.

This data gives a view of investors at karvy only. The investors at other brokerage

houses have not been taken into consideration. It is assumed however that the views of online

investors would not di ffer much.Tele calling: Most of the data collection was done by tale

calling, which caused hindrance in time and also in obtaining precise and correct information.

Tele-calling caused problems like clients questioning the authority of the caller and providing

inaccurate information.

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COMMODITIES MARKET

Commodities' trading in India is on the cusp of transformation. Organized commodities

trading as a professional service-oriented set-up, is a recent phenomenon in India but is growing

at a tremendous pace, emerging as the largest and most exciting service sectors of this

decade.

In order to match up with this phenomenal growth and pace, there is always going to be a

need for passionate, trained commodities professionals. In addition, the fast changing

commodities sector demands that professionals learn new skills, improve their efficiency, learn

to compete and think out of the box. All this requires an education that is intensive,

comprehensive and closely linked to the commodities derivatives market, through experiment

learning. Over the last couple of years, MCX has been recognized as an exchange, which adds

immense intellectual, cultural and professional energy to the industry on a continuous basis. It

believes in innovation - innovation both in theory and practice to meet the needs of the industry

not only today but into the future.

The training department of MCX has been in the vanguard of knowledge dissemination

across a wide spectrum of participants in the commodity industry, more than 3,000 individuals

have directly benefited from the various training programs conducted by the exchange during the

year 2005-06, in line with the pace of growth of the commodity market in India.

Commodities market essentially represents another kind of organized market just like thestock market and the debt market. However, commodities market, because of its unique nature

lends to the benefits of a wide spectrum of people like investors, importers, exporters, producers,

corporate, etc.,

What can commodities market offer?

Advantages to an investor, commodities futures represent a good form of investment

because of the following reasons.

High Leverage The margins in the commodity futures market are less than the

F&O section of the equity market.

Less Manipulations - Commodities markets, as they are governed by international

price movements are less prone to rigging or price manipulations.

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Diversification The returns from commodities market are free from the direct

influence of the equity and debt market, which means that they are capable of being used as

effective hedging instruments providing better diversification.

Advantages to Importer or an exporter,

Hedge against price fluctuations Wide fluctuations in the prices of import or export products

can directly affect to Importer or an exporter bottom-line as the price at which you import/export

is fixed before-hand. Commodity futures help Importer or an exporter to procure or sell the

commodities at a price decided months before the actual transaction, thereby ironing out any

change in prices that happen subsequently.

Advantages to Producer of a commodity, futures can help as follows:

Lock-in the price for your produce If you are a farmer, there is every chance that

the price of your produce may come down drastically at the time of harvest. By taking positions

in commodity futures you can effectively lock-in the price at which Producer wish to sell your

produce.

Assured demand Any glut in the market can make Producer wait unendingly for a

buyer. Selling commodity futures contract can give Producer assured demand at the time of

harvest.

Control your cost If Producer is an industrialist, the raw material cost dictates the

final price of Producer output. Any sudden rise in the price of raw materials can compel

Producer to pass on the hike to Producer customers and make your products unattractive in the

market. By buying commodity futures, Producer can fix the price of their raw material.

Ensure continuous supply Any shortfall in the supply of raw materials can stall

Producer production and make Producer default on Producer sale obligations. Producer can

avoid this risk by buying a commodity futures contract by which Producer are assured of supplyof a fixed quantity of materials at a pre-decided price at the appointed time.

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Trade from anywhere in India

Karvy, with its network of branches across the length and breadth of the country, is always

within customers reach, no matter where Producer is. This gives the facility to trade from

anywhere in India.

Personalized Services Karvy, with its wide array of personalized services from registry to

stock broking takes the pleasure of adding one more service, commodities broking with the same

personal touch.

State of Infrastructure

The strong IT backbone of Karvy helps us to provide customized direct services through

our back office system, nation-wide connectivity and website.

Round the clock operations in commodities trading

Indian commodities market, unlike stock market keeps awake till 11.30 in the night and

Karvy is all poised to offer round the clock services through its dedicated team of professionals.

Toopen the commodities trading account.

The account opening forms are available at at branch offices and with karvy business

associates. People are requested to kindly contact a branch nearby area and complete the account

opening formalities for commodities trading branches.

Also people can take a print out and fill out a simple account opening form from our website and

complete the necessary documentation as per the checklist enclosed in the form. The form after

duly filled up may be deposited at the nearest Karvy Branch or Associate along with a

cheque/DD favouring Karvy Comtrade Limited payable at Hyderabad towards initial margin.

Please remember the Member-Client agreement has to be executed on a non-judicial

stamp paper, as per the applicable by the Stamp Duty Act of the relevant state.

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1. Deposit Initial Margin:

You need to deposit an initial upfront margin as specified by the exchange (usually between 5-

10% of the contract value). The cheque/DD should be in favour of Karvy Comtrade Limited

2. Mark to Market Margin:

In addition to initial margin, you also need to keep a mark to market margin for taking care of the

adverse price movements, if any.

3. Duly filled up Client Registration form may be sent to the address below or to any

nearby Karvy branch:

Karvy Comtrade Limited

46, Avenue 4, Street No. 1,Banjara Hills,Hyderabad 500 034.Andhra Pradesh.

Following are e the commodities traded in MCX.

Gold, Gold M,Gold HNI, Silver, Silver M, Silver HNI

Castor Seeds, Soy Seeds, Castor Oil, Refined Soy Oil, Soymeal, RBD

Palmolein, Crude Palm Oil, Groundnut Oil, Mustard Seed, Mustard SeedOil, Cottonseed Oilcake, Cottonseed

Pepper, Red Chilli, Jeera, Turmeric

Steel Long, Steel Flat, Copper,Nickel, Tin

Kapas, Long Staple Cotton, Medium Staple Cotton

Chana, Urad, Yellow Peas, Tur

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http://www.karvycomtrade.com/gold_contract.asphttp://www.karvycomtrade.com/gold_m_contract.asphttp://www.karvycomtrade.com/gold_hni_contract.asphttp://www.karvycomtrade.com/silver_contract.asphttp://www.karvycomtrade.com/silver_m_contract.asphttp://www.karvycomtrade.com/silver_hni_contract.asphttp://www.karvycomtrade.com/castor_seed_contract.asphttp://www.karvycomtrade.com/soy_seed_contract.asphttp://www.karvycomtrade.com/castor_oil_contract.asphttp://www.karvycomtrade.com/re_soy_oil_contract.asphttp://www.karvycomtrade.com/soymeal_contract.asphttp://www.karvycomtrade.com/rbd_contract.asphttp://www.karvycomtrade.com/rbd_contract.asphttp://www.karvycomtrade.com/palm_oil_contract.asphttp://www.karvycomtrade.com/groundnut_oil_contract.asphttp://www.karvycomtrade.com/mustard_seed_contract.asphttp://www.karvycomtrade.com/mustard_seed_oil_contract.asphttp://www.karvycomtrade.com/mustard_seed_oil_contract.asphttp://www.karvycomtrade.com/cottonseed_oilcake_contract.asphttp://www.karvycomtrade.com/cottonseed_contract.asphttp://www.karvycomtrade.com/pepper_contract.asphttp://www.karvycomtrade.com/Red_Chilli_contract.asphttp://www.karvycomtrade.com/jeera_contract.asphttp://www.karvycomtrade.com/Turmeric_contract.asphttp://www.karvycomtrade.com/steel_long_contract.asphttp://www.karvycomtrade.com/steel_flat_contract.asphttp://www.karvycomtrade.com/copper_contract.asphttp://www.karvycomtrade.com/nickel_contract.asphttp://www.karvycomtrade.com/tin_contract.asphttp://www.karvycomtrade.com/kapas_contract.asphttp://www.karvycomtrade.com/long_staple_cotton_contract.asphttp://www.karvycomtrade.com/medium_staple_cotton_contract.asphttp://www.karvycomtrade.com/chana_contract.asphttp://www.karvycomtrade.com/urad_contract.asphttp://www.karvycomtrade.com/yellow_peas_contract.asphttp://www.karvycomtrade.com/tur_contract.asphttp://www.karvycomtrade.com/gold_contract.asphttp://www.karvycomtrade.com/gold_m_contract.asphttp://www.karvycomtrade.com/gold_hni_contract.asphttp://www.karvycomtrade.com/silver_contract.asphttp://www.karvycomtrade.com/silver_m_contract.asphttp://www.karvycomtrade.com/silver_hni_contract.asphttp://www.karvycomtrade.com/castor_seed_contract.asphttp://www.karvycomtrade.com/soy_seed_contract.asphttp://www.karvycomtrade.com/castor_oil_contract.asphttp://www.karvycomtrade.com/re_soy_oil_contract.asphttp://www.karvycomtrade.com/soymeal_contract.asphttp://www.karvycomtrade.com/rbd_contract.asphttp://www.karvycomtrade.com/rbd_contract.asphttp://www.karvycomtrade.com/palm_oil_contract.asphttp://www.karvycomtrade.com/groundnut_oil_contract.asphttp://www.karvycomtrade.com/mustard_seed_contract.asphttp://www.karvycomtrade.com/mustard_seed_oil_contract.asphttp://www.karvycomtrade.com/mustard_seed_oil_contract.asphttp://www.karvycomtrade.com/cottonseed_oilcake_contract.asphttp://www.karvycomtrade.com/cottonseed_contract.asphttp://www.karvycomtrade.com/pepper_contract.asphttp://www.karvycomtrade.com/Red_Chilli_contract.asphttp://www.karvycomtrade.com/jeera_contract.asphttp://www.karvycomtrade.com/Turmeric_contract.asphttp://www.karvycomtrade.com/steel_long_contract.asphttp://www.karvycomtrade.com/steel_flat_contract.asphttp://www.karvycomtrade.com/copper_contract.asphttp://www.karvycomtrade.com/nickel_contract.asphttp://www.karvycomtrade.com/tin_contract.asphttp://www.karvycomtrade.com/kapas_contract.asphttp://www.karvycomtrade.com/long_staple_cotton_contract.asphttp://www.karvycomtrade.com/medium_staple_cotton_contract.asphttp://www.karvycomtrade.com/chana_contract.asphttp://www.karvycomtrade.com/urad_contract.asphttp://www.karvycomtrade.com/yellow_peas_contract.asphttp://www.karvycomtrade.com/tur_contract.asp


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Rice, Basmati Rice, Wheat, Maize, Sarbati Rice

Crude Oil

Following are the commodities traded in NCDEX

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National Commodities and Derivatives Exchange, NCDEX

COMMODITY UNIT OF

PRICE

QUOTATION

UNIT OF

TRADING

YIELD/Re.

MOVEMENT

TIC

SIZE

or

TIC

YIELD/TI

C or TIC

VALUE

PRECIOUS METALS

GOLD 10gm 100gm 10.00 1.00 10.00

KILO GOLD 10gm 1000gm 100.00 1.00 100.00

SILVER 1KG 5KG 5.00 1.00 5.00

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MEGA

SILVER

1KG 30KG 30.00 1.00 30.00

\National Commodities and Derivatives Exchange, NCDEX

COMMODITY

UNIT OF

PRICE

QUOTATION

UNIT OF

TRADIN

G

YIELD/Re.

MOVEMENT

TIC

SIZE

or

TIC

YIELD/TIC

or TIC

VALUE

PRECIOUS METALS

GOLD 10gm 100gm 10.00 1.00 10.00

KILO GOLD 10gm 1000gm 100.00 1.00 100.00

SILVER 1KG 5KG 5.00 1.00 5.00

MEGA

SILVER1KG 30KG 30.00 1.00 30.00

SOYA 1QT 10MT 100.00 0.05 5.00

SOYA OIL 10KG 10MT 1000.00 0.05 50.00

CHANA 1QT 10MT 100.00 1.00 100.00

GAUR SEEDS 1QT 10MT 100.00 1.00 100.00

TUR 1QT 10MT 100.00 1.00 100

URD 1QT 10MT 100 1.00 100

CHILLI 1QT 5MT 50 1.00 50

TURMERIC 1QT 10MT 10 1.00 10

PEPPER 1QT 1MT 10.00 1.00 10.00

WHEAT 1QT 10MT 100 0.20 20

CASTOR 20KG 10MT 500 0.10 50

Multi-Commodity Exchange, MCX

COMMODITY UNIT OF

PRICE

UNIT OF

TRADIN

YIELD/Re.

MOVEMENT

TIC

SIZE

YIELD/TIC

or TIC

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QUOTATION Gor

TICVALUE

PRECIOUS METALS

GOLD-M 10gm 100gm 10.00 1.00 10.00

GOLD 10gm 1KG 100.00 1.00 100.00

SILVER-M 1KG 5KG 5.00 1.00 5.00

SILVER 1KG 30KG 30.00 1.00 30.00

CRUDE 1BBL 100BBL 100 1.00 100

AGRICULTURAL PRODUCTS

SOYA 1QT 10MT 100.00 0.05 5.00

SOYA 1QT 10MT 100.00 0.05 5.00

MENTHA OIL 1KG 360KG 360 0.10 36.00

POTATO 1QT 30MT 300 0.10 30.00

KAPAS

KHALI50KG 5MT 100 0.10 10.00

CARDAMOM 1KG 500KG 500 0.50 250

INDUSTRIAL METALS

STEEL LONG 1MT 10MT 10.00 1.00 10

Eg::take a gold for trading if there is a movement of 1 rupee in the tick size there wil be yeild of

5 rupees for every 10 gm and the lot size is 100 gm i:minimum purchase of precious metal gold

is 100 gm .

Note: NCDEX introduced trading on Saturdays in all eligible contracts with effect from May 15,

2004

A commodity derivative derives its value from an underlying asset, which is necessarily a

commodity. To understand the commodity derivatives markets its necessary to clear about

commodities. Commodities, in simple words are any goods that are common and unbranded.

Gold, silver, rubber, pepper, jute, wheat, sugar, cotton etc., are some of the common

commodities. For e.g. apple juice can be a commodity whereas the Real apple juice cannot be

called a commodity. Customers may be surprised to know that in the US commodities markets

there are futures available even on cattle. Another feature of commodities is that they are

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commonly available. Commodity markets represent the formal system for the interplay of

demand for and supply of commodities. These markets can be broadly classified into spot market

and futures market. Commodities for immediate delivery are traded through the spot market. The

players in the spot market are the actual producers and the consumers of the commodities.

The other type of market called the Futures market is for facilitating contracts for future

delivery. (Please go through the material on Futures and Options to understand about futures)

These markets make available for trading, the various derivatives based on commodities. Usually

traded ones are the futures and options. However in India options on commodities are not

available and are expected to be introduced soon. The players in the futures markets are Hedgers,

Arbitragers and investors. Hedgers are those who hold simultaneous positions in the spot market

also. These are generally the actual consumers or the producers of the commodities. For eg: A

wheat farmer who expects his harvest to be over in 3 months time may sell a futures contract

with an expiry of three months, so that even if the prices happen

The large scale consumers of the products can also make use of the futures to secure their

purchase. For eg: A cool drinks can manufacturing company may buy tin futures, so that even if

the prices happen to rise later, they can be assured of the supply of raw materials at the pre-

determined price. The other major group of participants in the commodity futures market is the

importers and the exporters. Since they have confirmed obligations to /import fixed quantity of

commodities at a particular period of time, they can take opposite positions in the futures market.

Arbitrage is a process of making profits using the price differences between two markets without

exposing oneself to any risk. Arbitraging is a very profitable business. It is possible to arbitrage

between two different futures markets or between the futures market and the spot market.

However in an efficient market arbitraging is not possible, because any price gap is closed

immediately as soon the arbitragers enter the market. Investors are those who participate in the

market for profits and are ready to face the risk involved in the market. An investor can be

anyone from an individual who has a small surplus income to the treasury desks of banks and

corporate. Most commonly traded derivatives around the world are futures, options and option

futures.

Some of the most popular commodity exchanges in the world are listed below:

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London Metals Exchange, London

New York Mercantile Exchange, New York

Chicago Mercantile Exchange, Chicago

Chicago Board of Trade, Chicago

London International Financial Futures and Options Exchange (LIFFE), London

Tokyo Commodity Exchange, Tokyo

Winnipeg Commodity Exchange, Canada

Participants

Individual investors

Policy makers

Commodity exchanges

Commodity and hedge fund managers

Consulting firms

Regulatory authorities

Research organisation

Cororate houses

What are the major commodity Exchanges?

The Government of India permitted establishment of National-level Multi-Commodity

exchanges in the year 2002 and accordingly three exchanges have come into picture. They are:

Multi-Commodity Exchange of India Ltd, Mumbai (MCX).

National Commodity and Derivatives Exchange of India, Mumbai (NCDEX).

National Multi Commodity Exchange, Ahmedabad (NMCE).

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What are the working hours for the commodity exchanges?

Commodity Exchanges (MCX and NCDEX) function from 10.00 Am to 11.30 PM with a

break of 30 minutes between 5.00 PM and 5.30 PM. However some specific commodities with

strong international price linkages (such as Gold, Silver, Soy oil, Crude Oil etc) are allowed to betraded after 8.00 PM.

Who regulates the commodity exchanges?

Just as SEBI regulates the stock exchanges, commodity exchanges are regulated by

Forwards Market Commission (FMC); Forwards Market Commission is under the purview of the

Ministry of Food, Agriculture and Public Distribution.

How risky are these markets compared to stock & bond markets?

Commodity prices are generally less volatile than the stocks and this has been statistically

proven. Therefore it's relatively safer to trade in commodities.

Also the regulatory authorities ensure through continuous vigil that the commodity prices are

market-driven and free from manipulations.

However all investments are subject to market risk and depends on the individual decision. There

is risk of loss while trading in commodity futures like any other financial instruments.

How the deliveries are made possible?

The exchange has enlisted certain cities for specific commodities as the delivery centers.

The seller of commodity futures, upon expiry of the contract may choose to deliver physical

stock instead of settling the positions by cash, in which case he would be required to deliver the

stocks to the specified warehouses. The buyer of the commodity futures, if he is interested in

physical delivery would be matched with a seller and would be required to take delivery of the

specified quantity of stock from the designated warehouse. Worldwide commodity futures are

generally used for hedging and speculation and hence physical deliveries are negligible.

However the possibility of physical delivery has made these markets more attractive in India.

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Both NCDEX and MCX have successfully completed physical delivery in bullions and various

agro-commodities.

In case of NCDEX it is mandatory to open a Demat account with an approved DP by the buyer

and seller if they wish to take/ give delivery of goods.

What is the date of expiry?

At NCDEX the contracts expire on 20 Th day of each month. If 20 Th happens to be a

holiday the expiry day will be the previous working day.

At MCX the expiry day is 15 Th of every month. If 15 Th happens to be a holiday the expiry day

will be the previous working day. The expiry day also differs for different commodities in both

the exchanges.

How much are the margins on these Commodity futures?

Generally commodity futures require an initial margin between 5-10% of the contract

value. The exchanges levy higher additional margin in case of excess volatility. The margin

amount varies between exchanges and commodities. Therefore they provide great benefits of

leverage in comparison to the stock and index futures trade on the stock exchanges. The

exchange also requires the daily profits and losses to be paid in/out on open positions (Mark to

Market or MTM) so that the buyers and sellers do not carry a risk of not more than one day.

Following is a table showing the details # regarding major commodities traded

on MCX & NCDEX

MCX

Commodity Initial Margin Quotation Lot Size Delivery Center

Gold 3.5% 10 Gm 1 Kg Mumbai, Ahmadabad

Silver 5% 1 KG 30 KG Ahmadabad

Crude Oil 5% 1 bl 100 bls Mumbai

Soy Oil 3% 10 KG 10 MT Indore

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Pepper 8% 10 KG 100 KG Kochi

Soy Seed 4% 1 MT 10 MT Indore

CAPITAL MARKETS

Introduction to Capital Markets

Transfer of resources from those with idle resources to others who have a productive need

for them is perhaps most efficiently achieved through the securities markets. Stated formally,

securities markets provide channels for allocation of savings to investments and thereby

decouple these two activities. As a result, the savers and investors are not constrained by their

individual abilities, but by the economys abilities to invest and save respectively, which

inevitably enhances savings and investment in the economy.

Market Segments

The securities market has two interdependent and inseparable segments, the new issues

(primary market) and the stock (secondary) market. The primary market provides the channel for

sale of new securities while the secondary market deals in securities previously issued. The price

signals, which subsume all information about the issuer and his business including associated

risk, generated in the secondary market, help the primary market in allocation of funds. The

issuers of securities issue (create and sell) new securities in the primary market to raise funds for

investment and/or to discharge some obligation. They do so either through public issues or

private placement. There are two major types of issuers who issue securities. The corporate

entities issue mainly debt and equity instruments (shares, debentures, etc.), while the

governments (central and state governments) issue debt securities (dated securities, treasury

bills).

The secondary market enables participants who hold securities to adjust their holdings in

response to changes in their assessment of risk and return. They also sell securities for cash to

meet their liquidity needs. A variant of secondary market is the forward market, where securities

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are traded for future delivery and payment. Pure forward is outside the formal market. The

versions of forward in formal market are futures and options. In futures market, standardized

securities are traded for future delivery and settlement. These futures can be on a basket of

securities like an index or an individual security.

case of options, securities are traded for conditional future delivery. There are two types of

options a put option permits the owner to sell a security to the writer of options at a

predetermined price while a call option permits the owner to purchase a security from the writer

of the option at a predetermined price. These options can also be on individual stocks or basket

of stocks like index. Two exchanges, namely NSE and BSE provide trading of derivatives of

securities.

Products and Participants

Savings are linked to investments by a variety of intermediaries through a range of complex

financial products called securities which is defined in the Securities Contracts (Regulation)

Act, 1956. Which includes shares, scrips, stocks, bonds, debentures, debenture stock, or other

marketable securities of like nature in or of any incorporate company or body corporate,

government securities, derivatives of securities, units of collective investment scheme, security

receipts, interest and rights in securities,

Stock Basics: What Causes Prices to Change?

Stockprices change every day by market forces. By this we mean that share prices change

because ofsupply and demand. If more people want to buy a stock (demand) than sell it

(supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it,

there would be greater supply than demand, and the price would fall.

Understanding supply and demand is easy. What is difficult to comprehend is what makes people

like a particular stock and dislike another stock. This comes down to figuring out what news is

positive for a company and what news is negative.

The price movement of a stock indicates what investors feel a company is worth. The

value of a company is its market capitalization, which is the stock price multiplied by the number

ofshares outstanding.

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For example, a company that trades at Rs.100 per share and has 1,000,000 shares outstanding

has a lesser value than a company that trades at Rs.50 but has 5,000,000 shares outstanding

(Rs.100 x 1,000,000 = Rs.100,000,000 while Rs.50 x 5,000,000 = Rs.250,000,000). The price of

a stock doesn't only reflect a company's current value; it also reflects the growth that investors

expect in the future.

The most important factor that affects the value of a company is its earnings. Earnings are the

profit a company makes, and in the long run no company can survive without them. Public

companies are required to report their earnings four times a year (once each quarter). National

Stock Exchange watches with rabid attention at these times, which are referred to as earnings

seasons. The reason behind this is that analysts base their future value of a company on their

earnings projection. If a company's results surprise (are better than expected), the price jumps up.

If a company's results disappoint (are worse than expected), then the price will fall.

Some believe that it isn't possible to predict how stocks will change in price while others think

that by drawing charts and looking at past price movements, you can determine when to buy and

sell. The only thing we do know, as a certainty is that stocks are volatile and can change in price

extremely rapidly.

The important things to consider about stocks are the following:

At the most fundamental level, supply and demand in the market determine stock price.

Price times the number of shares outstanding (market capitalization) is the value of a company.

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How to Read a Stock Table/Quote

Columns 1 & 2: 52-Week Hi and Low - These are the highest and lowest prices at which a

stock has traded over the previous 52 weeks (one year). This typically does not include the

previous day's trading.

Column 3: Company Name & Type of Stock - This column lists the name of the company. If

there are no special symbols or letters following the name, it is common stock. Different symbols

imply different classes of shares. For example, "pf" means the shares are

Preferred stock.

Column 4: Ticker Symbol - This is the unique alphabetic name which identifies the stock.

Column 5: Dividend per Share - This indicates the annual dividend payment per share. If this

space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield - This states the percentage return on the dividend, calculated as

annual dividends per share divided by price per share.

Column 7: Price/Earnings Ratio - This is calculated by dividing the current stock price by

earnings per share from the last four quarters.

Column 8: Trading Volume - This figure shows the total number of shares traded for the day,

listed in hundreds. To get the actual number traded, add "00" to the end of the number listed.

Column 9 & 10: Day High & Low - This indicates the price range at which the stock has traded

at throughout the day. In other words, these are the maximum and the minimum prices that

people have paid for

Analysis of Commodity Market With Capital Market

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