Management Thesis

A study on Commodity market-A new source of investment and customer preference towards commodity market Introduction Ever since the dawn of civilization commodities trading has become an integral part in the lives of mankind. The very reason for this lies in the fact that commodities represent the fundamental elements of utility for human begins. The term commodity refers to any material, which can be bought and sold. Commodities in a market’s context refer to any movable property other than actionable claims, money and securities. Over the years commodities market have been experiencing tremendous progress, which is evident from the fact that the trade in this segment is standing as the boon for the global economy today. The promising nature of this market has made them an attractive investment avenue for investors. In the early days people followed a mechanism for trading called barter system, which involves exchange of goods for goods. This was the first form of trade between individual and even nations. The absence of commonly accepted medium of exchange has initiated the need for barter system. People used to acquire those commodities which they lacked in exchange of those commodities which are in excess with them. The commodities trade is believed to have its genesis in sumeria. The early commodity contract was carried out using clay tokens as medium of exchange. Animals are believed to be the first commodities, which were traded, among individuals. The internationalization of commodity market integration that occurred after the European voyage of discovery during the 15th century. The development of international commodities trade is characterized by the increase in volumes of trade among the nations and the convergence of price related to the identical commodities in different markets. The major impetus for the commodities trade was provided by the changes in demand patterns, scarcity and the supply potential both within and across the nations.

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Coming to Indian scenario, despite a long history, despite a long history of commodity markets, commodity markets in India are still in their initial stages of development. The reasons for this can be initial stages of development. The reasons for this can be attributed to stringent regulatory innervations, intermediate ban on commodity trading and policy innervations by the government. Commodity markets have a huge potential in the Indian context particularly because of agriculture liberalization, commodities’ trading in India has gained increased momentum in activities. To increase the efficiency of the markets the forward Markets commission (FMC), the governing body of commodities trading in India, has taken several initiatives for the establishment of national level multicommodity exchange in India. These exchanges serve as platforms for facilitating transparent trading in multiple commodities, electronic delivery systems and efficient regulatory mechanism, creating a world class environment for Indian traders. In order to sustain the increasing volumes in commodities trade, the need for proper clearing and settlement systems, warehousing facilities and efficient pricing mechanisms have been identified. With the recent boom in commodities markets, Indian participants are gearing up for exploiting the potential opportunities in future. Commodity markets are of great help not only for their participants but also for the economy as a whole. The twenty year bear market for commodity has drastically reduced the prices of many commodities to their lowest levels. The present shift in trend in commodity trading coupled with the global increase in demand will certainly hold a promising future for the investment in this segment. Since 2003 Indian market is in the evaluation and development of commodities markets and their significance in the arena of strategic investment.

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Objective of study 1. To understand awareness of investor about commodity market. 3. To understand investment Pattern of investors for commodity market. 4. To understand comparing commodity market investment with other investment.

Description of the problem The study is regarding Commodity market- A new source of investment and customer preference towards commodity market. I have taken this topic because commodity market investment is new investment avenue and many of the people are not aware and those who are aware what are their investment pattern? Since these days as market are volatile most of people who are investing in the market have different strategies and ways.

Justification of purposed study Globalization of the financial market has led to a manifold increase in investment. New markets have been opened; new instruments have been developed; and new services have been launched. Besides, a number of opportunities and challenges have also been thrown open. Online Commodities trading is new as compared to other investment in India. Mainly three exchanges are involved in online commodities trading MCX, NCDEX & NMCE.

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Research design of the study The study is based on survey technique. The study consists of analysis about customer’s awareness and satisfaction of commodity market. For the purpose of the study 100 customers were picked up at random and their views solicited on different parameters. The methodology adopted includes  Questionnaire  Random sample survey of customers  Discussions with the concerned Personal interviews and informal discussions will be held when I will be doing market research with new customers to ascertain the awareness and existing consumers’ satisfaction level. Further applying simple statistical techniques has processed the data collected.

Sources of data:  Primary data: Questionnaire 

Secondary data: For the secondary data I have search some sites and some journal of ICFAI university.

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Sampling plan:  Sampling: Since I have selected commodities segment as per my profile to do market

research. 100% coverage was difficult within the limited period of time. Hence sampling survey method was adopted for the purpose of the study.  Population: Since this survey has to be completed in 3 months that’s why total no of

customers those who are investing in the market.  Sampling size: A sample of hundred was chosen for the purpose of the study. Sample

consisted of small investors, large investors and traders. 

Sampling Methods: Probability sampling requires complete knowledge about all sampling units in the universe. Due to time constraint non-probability sampling was chosen for the study.

 Sampling procedure: From large number of customers & non consumers sample lot

were randomly picked up by me.  Field Study: Directly approached respondents (businessmen, small shopkeepers,

physical commodities traders and service class people).

Hypothesis: Null hypothesis: Most of people invest in commodity market. H¹ Hypothesis-Most of people invest in other investment such as Equity, mutual fund, Debt securities, bonds etc.

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Data collection instrument: 1. Collection of data through Questionnaires: The data collected for the study purpose is through questionnaires. One hundred customers and non consumer were selected randomly for the study purpose and then the information revealed from the customers is analyzed and interpreted in the study. 2. Organization of field work Initial field work has to be done for testing tools for data collection. The data was collected through the direct interaction with the customers & non consumers through questionnaires answered by them. One hundred customers were randomly chosen for the purpose of the study in Mumbai.

Project schedule The study is on commodity market and customer investment pattern and for research I have to survey and have to compare commodity market investment with other alternative investment such as in equity, mutual fund, insurance, and debt securities etc. therefore It will require 3 months to complete the research report.

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REFERENCES Website:1. WWW.GOOGLE.COM 2. WWW.PDFCOKE.COM 3. WWW.MONEYCONTROL.COM

Journal:1. Commodity market- An Introduction (Edited by N JANARDHAN RAO) 2. Commodity markets- Recent developments (Edited by DHANDAPANI ALAGIRI) 3. Indian stock market-An Empirical study (Edited by O.P.GUPTA, AMITABH GUPTA, CHANDRIMA SIKDAR, TAPAS MAHAPATRA)

Appendices Copyright(c) 2009 Sunil D. Tiwari Permission is granted to copy, distribute and/or modify this document under the terms of GNU free documentation license, version 1.2 or any later version published by free software foundation; with no invariant sections, no FrontCover Texts, and no Back-Cover Texts. A copy of license is included in section entitled “GNU Free Documentation License”

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