a study on performance of indian commodity market for top four commodities traded in mcxwith special...
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 181
A STUDY ON PERFORMANCE OF
INDIAN COMMODITY MARKET FOR
TOP FOUR COMMODITIES TRADEDIN MCX WITH SPECIAL REFERENCE
TO SHARE KHAN
PROJECT REPORT
Submitted by
JAYADEVANT
Register No712811631012
in partial fulfillment for the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
IN
DEPARTMENT OF MANAGEMENT STUDIES
RVS COLLEGE OF ENGINEERING AND TECHNOLOGY
COIMBATORE ndash 641 402
JULY 2013
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 281
983122983126983123 983107983119983116983116983109983111983109 983119983110 983109983118983111983113983118983109983109983122983113983118983111 983105983118983108 983124983109983107983112983118983119983116983119983111983129
983107983119983113983117983106983105983124983119983122983109 991251 641 402
983108983109983120983105983122983124983117983109983118983124 983119983110 983117983105983118983105983111983109983117983109983118983124 983123983124983125983108983113983109983123
983120983122983119983114983109983107983124 983127983119983122983115
983114983125983116983129 2013
983124983144983145983155 983145983155 983156983151 983139983141983154983156983145983142983161 983156983144983137983156 983156983144983141 983152983154983151983146983141983139983156 983141983150983156983145983156983148983141983140
A STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX
WITH SPECIAL REFERENCE TO SHARE KHAN
983145983155 983156983144983141 983138983151983150983137983142983145983140983141 983154983141983139983151983154983140 983151983142 983152983154983151983146983141983139983156 983159983151983154983147 983140983151983150983141 983138983161
983114983105983129983105983108983109983126983105983118983124
983122983141983143983145983155983156983141983154 983118983151 712811631012
983151983142 983117BA 983140983157983154983145983150983143 983156983144983141 983161983141983137983154 20119830852013
983120983154983151983146983141983139983156 G983157983145983140983141 H983141983137983140 983151983142 983156983144983141 D983141983152983137983154983156983149983141983150983156
983123983157983138983149983145983156983156983141983140 983142983151983154 983156983144983141 983120983154983151983146983141983139983156 983126983145983158983137983085983126983151983139983141 983141983160983137983149983145983150983137983156983145983151983150 983144983141983148983140 983151983150 983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085
I983150983156983141983154983150983137983148 E983160983137983149983145983150983141983154 E983160983156983141983154983150983137983148 E983160983137983149983145983150983141983154
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 381
983108983109983107983116983105983122983105983124983113983119983118
I 983137983142983142983145983154983149 983156983144983137983156 983156983144983141 983152983154983151983146983141983139983156 983159983151983154983147 983156983145983156983148983141983140 991260A 983123983124983125D983129 983119983118 983120E983122F983119983122983117A983118CE 983119F
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983127I983124H 983123983120ECIAL 983122EFE983122E983118CE 983124983119 983123HA983122E KHA983118991261 983138983141983145983150983143 983155983157983138983149983145983156983156983141983140 983145983150 983152983137983154983156983145983137983148 983142983157983148983142983145983148983148983149983141983150983156
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983137983159983137983154983140 983151983142 983137983150983161 983140983141983143983154983141983141 983151983154 983140983145983152983148983151983149983137 983141983145983156983144983141983154 983145983150 983156983144983145983155 983151983154 983137983150983161 983151983156983144983141983154 983125983150983145983158983141983154983155983145983156983161
983114983105983129983105983108983109983126983105983118983124
(712811631012)
I 983139983141983154983156983145983142983161 983156983144983137983156 983156983144983141 983140983141983139983148983137983154983137983156983145983151983150 983149983137983140983141 983137983138983151983158983141 983138983161 983156983144983141 983139983137983150983140983145983140983137983156983141 983145983155 983156983154983157983141
MrRejish David Jose P
Assistant Professor
Department of Management Studies RVS College of Engineering and Technology
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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ACKNOWLEDGEMENT
I extend my deep sense of gratitude and sincere thanks to our principal
DrVGunaraj ME PhD who has given me a wonderful opportunity to
undertake the project work
I wish to express my sincere thanks to DrPVPrabha MBA PhD
Director RVS Institute of Management Studies for supporting my project work
I pay my respectful thanks to our Head of the Department ProfSPreetham
Sridar MBA MPhil (PhD) for encouraging me throughout the course of the
project
I express my sincere thanks to my project guide MrRejish David JoseP
Assistant Professor for the guidance and support in carrying out the project work
I would like to express my sincere thanks to organization guide
MrMohandasBranch Manager for his valuable support and guidance
throughout my project work
I also express my gratitude to all the Faculty members my Friends and my
Parents who have helped me to carry out this work Last but not least I thank theAlmighty for his blessing showed on me during this work
JAYADEVANT
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 581
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11 983105983106983119983125983124 983124983112983109 983113983118983108983125983123983124983122983129 1
12 983105983106983119983125983124 983124983112983109 983107983119983117983120983105983118983129 13
13 983105983106983119983125983124 983124983112983109 983123983124983125983108983129 15
131 983119983106983114983109983107983124983113983126983109983123 983119983110 983124983112983109 983123983124983125983108983129 15
132 983120983109983122983113983119983108 983119983110 983124983112983109 983123983124983125983108983129 15
133 983124983119983119983116983123 983105983118983108 983124983109983107983112983118983113983121983125983109983123 15
134 983123983119983122983107983109983123 983119983110 983108983105983124983105 15
135 983116983113983117983113983124983105983124983113983119983118983123 983119983110 983124983112983109 983123983124983125983108983129 16
983113983113 983122983109983126983113983109983127 983119983110 983116983113983124983109983122983105983124983125983122983109 17
983113983113983113 983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129 22
983113983126 983105983118983105983116983129983123983113983123 amp 983113983118983124983109983122983120983122983109983124983105983124983113983119983118 25
983126 983110983113983118983108983113983118983111983123 65
983126983113 983123983125983111983111983109983123983124983113983119983118983123 71
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983106983113983106983116983113983119983111983122983105983120983112983129
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
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44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
410 983117983119983126I983118G A983126E983122AGE 983119F C983119983120983120E983122 55
411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
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983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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983138983145983148983148983145983151983150 639330 983138983145983148983148983145983151983150 983137983150983140 458810 983138983145983148983148983145983151983150983154983141983155983152983141983139983156983145983158983141983148983161 A983139983139983151983154983140983145983150983143 983156983151 983140983137983156983137 983149983137983145983150983156983137983145983150983141983140 983138983161 983156983144983141
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983107983119983113983117983106983105983124983119983122983109 991251 641 402
983108983109983120983105983122983124983117983109983118983124 983119983110 983117983105983118983105983111983109983117983109983118983124 983123983124983125983108983113983109983123
983120983122983119983114983109983107983124 983127983119983122983115
983114983125983116983129 2013
983124983144983145983155 983145983155 983156983151 983139983141983154983156983145983142983161 983156983144983137983156 983156983144983141 983152983154983151983146983141983139983156 983141983150983156983145983156983148983141983140
A STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX
WITH SPECIAL REFERENCE TO SHARE KHAN
983145983155 983156983144983141 983138983151983150983137983142983145983140983141 983154983141983139983151983154983140 983151983142 983152983154983151983146983141983139983156 983159983151983154983147 983140983151983150983141 983138983161
983114983105983129983105983108983109983126983105983118983124
983122983141983143983145983155983156983141983154 983118983151 712811631012
983151983142 983117BA 983140983157983154983145983150983143 983156983144983141 983161983141983137983154 20119830852013
983120983154983151983146983141983139983156 G983157983145983140983141 H983141983137983140 983151983142 983156983144983141 D983141983152983137983154983156983149983141983150983156
983123983157983138983149983145983156983156983141983140 983142983151983154 983156983144983141 983120983154983151983146983141983139983156 983126983145983158983137983085983126983151983139983141 983141983160983137983149983145983150983137983156983145983151983150 983144983141983148983140 983151983150 983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085983085
I983150983156983141983154983150983137983148 E983160983137983149983145983150983141983154 E983160983156983141983154983150983137983148 E983160983137983149983145983150983141983154
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983108983109983107983116983105983122983105983124983113983119983118
I 983137983142983142983145983154983149 983156983144983137983156 983156983144983141 983152983154983151983146983141983139983156 983159983151983154983147 983156983145983156983148983141983140 991260A 983123983124983125D983129 983119983118 983120E983122F983119983122983117A983118CE 983119F
I983118DIA983118 C983119983117983117983119DI983124983129 983117A983122KE983124 F983119983122 983124983119983120 F983119983125983122 C983119983117983117983119DI983124IE983123 983124983122ADED I983118 983117C983128
983127I983124H 983123983120ECIAL 983122EFE983122E983118CE 983124983119 983123HA983122E KHA983118991261 983138983141983145983150983143 983155983157983138983149983145983156983156983141983140 983145983150 983152983137983154983156983145983137983148 983142983157983148983142983145983148983148983149983141983150983156
983142983151983154 983156983144983141 983137983159983137983154983140 983151983142 983117983137983155983156983141983154 983151983142 983106983157983155983145983150983141983155983155 983105983140983149983145983150983145983155983156983154983137983156983145983151983150 983145983155 983156983144983141 983151983154983145983143983145983150983137983148 983159983151983154983147 983139983137983154983154983145983141983140
983151983157983156 983138983161 983149983141 I983156 983144983137983155 983150983151983156 983142983151983154983149983141983140 983156983144983141 983152983137983154983156 983151983142 983137983150983161 983151983156983144983141983154 983152983154983151983146983141983139983156 983159983151983154983147 983155983157983138983149983145983156983156983141983140 983142983151983154
983137983159983137983154983140 983151983142 983137983150983161 983140983141983143983154983141983141 983151983154 983140983145983152983148983151983149983137 983141983145983156983144983141983154 983145983150 983156983144983145983155 983151983154 983137983150983161 983151983156983144983141983154 983125983150983145983158983141983154983155983145983156983161
983114983105983129983105983108983109983126983105983118983124
(712811631012)
I 983139983141983154983156983145983142983161 983156983144983137983156 983156983144983141 983140983141983139983148983137983154983137983156983145983151983150 983149983137983140983141 983137983138983151983158983141 983138983161 983156983144983141 983139983137983150983140983145983140983137983156983141 983145983155 983156983154983157983141
MrRejish David Jose P
Assistant Professor
Department of Management Studies RVS College of Engineering and Technology
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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ACKNOWLEDGEMENT
I extend my deep sense of gratitude and sincere thanks to our principal
DrVGunaraj ME PhD who has given me a wonderful opportunity to
undertake the project work
I wish to express my sincere thanks to DrPVPrabha MBA PhD
Director RVS Institute of Management Studies for supporting my project work
I pay my respectful thanks to our Head of the Department ProfSPreetham
Sridar MBA MPhil (PhD) for encouraging me throughout the course of the
project
I express my sincere thanks to my project guide MrRejish David JoseP
Assistant Professor for the guidance and support in carrying out the project work
I would like to express my sincere thanks to organization guide
MrMohandasBranch Manager for his valuable support and guidance
throughout my project work
I also express my gratitude to all the Faculty members my Friends and my
Parents who have helped me to carry out this work Last but not least I thank theAlmighty for his blessing showed on me during this work
JAYADEVANT
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983124983105983106983116983109 983119983110 983107983119983118983124983109983118983124983123
983107983112983105983120983124983109983122 983118983119 983108983109983123983107983122983113983120983124983113983119983118 983120983105983111983109 983118983119
983116983113983123983124 983119983110 983124983105983106983116983109983123
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983105983106983123983124983122983105983107983124
983113 983113983118983124983122983119983108983125983107983124983113983119983118 1
11 983105983106983119983125983124 983124983112983109 983113983118983108983125983123983124983122983129 1
12 983105983106983119983125983124 983124983112983109 983107983119983117983120983105983118983129 13
13 983105983106983119983125983124 983124983112983109 983123983124983125983108983129 15
131 983119983106983114983109983107983124983113983126983109983123 983119983110 983124983112983109 983123983124983125983108983129 15
132 983120983109983122983113983119983108 983119983110 983124983112983109 983123983124983125983108983129 15
133 983124983119983119983116983123 983105983118983108 983124983109983107983112983118983113983121983125983109983123 15
134 983123983119983122983107983109983123 983119983110 983108983105983124983105 15
135 983116983113983117983113983124983105983124983113983119983118983123 983119983110 983124983112983109 983123983124983125983108983129 16
983113983113 983122983109983126983113983109983127 983119983110 983116983113983124983109983122983105983124983125983122983109 17
983113983113983113 983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129 22
983113983126 983105983118983105983116983129983123983113983123 amp 983113983118983124983109983122983120983122983109983124983105983124983113983119983118 25
983126 983110983113983118983108983113983118983111983123 65
983126983113 983123983125983111983111983109983123983124983113983119983118983123 71
983126983113983113 983107983119983118983107983116983125983123983113983119983118 72
983106983113983106983116983113983119983111983122983105983120983112983129
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
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44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
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411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
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1
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983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
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983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
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983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
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9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
983145983156983155 983151983145983148 983137983150983140 983151983145983148983139983137983147983141 983137983150983140 983122BD
983120983137983148983149983151983148983145983141983150
15 983124983144983141 F983145983154983155983156 C983151983149983149983151983140983145983156983145983141983155 E983160983139983144983137983150983143983141 983151983142 I983150983140983145983137
L983156983140 K983151983139983144983145
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16 C983141983150983156983154983137983148 I983150983140983145983137 C983151983149983149983141983154983139983141 E983160983139983144983137983150983143983141 L983156983140
G983159983137983148983145983151983154
G983157983154 983137983150983140 983117983157983155983156983137983154983140 983123983141983141983140
17 E983085983123983157983143983137983154 I983150983140983145983137 L983156983140 983117983157983149983138983137983145 983123983157983143983137983154
18 983118983137983156983145983151983150983137983148 983117983157983148983156983145 991251C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 983151983142
I983150983140983145983137 L983156983140 A983144983149983141983140983137983138983137983140
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160 983137983150983140 983122983157983138983138983141983154
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983137983150983140 983123983137983139983147983145983150983143
19 C983151983142983142983141983141 F983157983156983157983154983141983155 E983160983139983144983137983150983143983141 I983150983140983145983137
L983156983140B983137983150983143983137983148983151983154983141
C983151983142983142983141983141
20 983123983157983154983141983150983140983154983137983150983137983143983137983154 C983151983156983156983151983150 983151983145983148 amp 983119983145983148983155983141983141983140983155
983123983157983154983141983150983140983154983137983150983137983143983137983154
C983151983156983156983151983150C983151983156983156983151983150 983155983141983141983140 K983137983152983137983155
21 E983085C983151983149983149983151983140983145983156983145983141983155 L983156983140983118983141983159 D983141983148983144983145 983123983157983143983137983154
22 B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155 A983155983155983151983139983145983137983156983145983151983150 B983145983147983137983150983141983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp 983151983145983148983139983137983147983141
23 983117983157983148983156983145 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 (983117C983128) 983117983157983149983138983137983145 983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
24 983118983137983156983145983151983150983137983148 C983151983149983149983151983140983145983156983161 983137983150983140 D983141983154983145983158983137983156983145983151983150
E983160983139983144983137983150983143983141 ( 983118CDE983128) 983117983157983149983138983137983145
983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
25 983118983137983156983145983151983150983137983148 983117983157983148983156983145 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
(983118983117CE)
983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
26 I983150983140983145983137983150 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 ( ICE983128) 983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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10
Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1981
13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983108983109983107983116983105983122983105983124983113983119983118
I 983137983142983142983145983154983149 983156983144983137983156 983156983144983141 983152983154983151983146983141983139983156 983159983151983154983147 983156983145983156983148983141983140 991260A 983123983124983125D983129 983119983118 983120E983122F983119983122983117A983118CE 983119F
I983118DIA983118 C983119983117983117983119DI983124983129 983117A983122KE983124 F983119983122 983124983119983120 F983119983125983122 C983119983117983117983119DI983124IE983123 983124983122ADED I983118 983117C983128
983127I983124H 983123983120ECIAL 983122EFE983122E983118CE 983124983119 983123HA983122E KHA983118991261 983138983141983145983150983143 983155983157983138983149983145983156983156983141983140 983145983150 983152983137983154983156983145983137983148 983142983157983148983142983145983148983148983149983141983150983156
983142983151983154 983156983144983141 983137983159983137983154983140 983151983142 983117983137983155983156983141983154 983151983142 983106983157983155983145983150983141983155983155 983105983140983149983145983150983145983155983156983154983137983156983145983151983150 983145983155 983156983144983141 983151983154983145983143983145983150983137983148 983159983151983154983147 983139983137983154983154983145983141983140
983151983157983156 983138983161 983149983141 I983156 983144983137983155 983150983151983156 983142983151983154983149983141983140 983156983144983141 983152983137983154983156 983151983142 983137983150983161 983151983156983144983141983154 983152983154983151983146983141983139983156 983159983151983154983147 983155983157983138983149983145983156983156983141983140 983142983151983154
983137983159983137983154983140 983151983142 983137983150983161 983140983141983143983154983141983141 983151983154 983140983145983152983148983151983149983137 983141983145983156983144983141983154 983145983150 983156983144983145983155 983151983154 983137983150983161 983151983156983144983141983154 983125983150983145983158983141983154983155983145983156983161
983114983105983129983105983108983109983126983105983118983124
(712811631012)
I 983139983141983154983156983145983142983161 983156983144983137983156 983156983144983141 983140983141983139983148983137983154983137983156983145983151983150 983149983137983140983141 983137983138983151983158983141 983138983161 983156983144983141 983139983137983150983140983145983140983137983156983141 983145983155 983156983154983157983141
MrRejish David Jose P
Assistant Professor
Department of Management Studies RVS College of Engineering and Technology
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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ACKNOWLEDGEMENT
I extend my deep sense of gratitude and sincere thanks to our principal
DrVGunaraj ME PhD who has given me a wonderful opportunity to
undertake the project work
I wish to express my sincere thanks to DrPVPrabha MBA PhD
Director RVS Institute of Management Studies for supporting my project work
I pay my respectful thanks to our Head of the Department ProfSPreetham
Sridar MBA MPhil (PhD) for encouraging me throughout the course of the
project
I express my sincere thanks to my project guide MrRejish David JoseP
Assistant Professor for the guidance and support in carrying out the project work
I would like to express my sincere thanks to organization guide
MrMohandasBranch Manager for his valuable support and guidance
throughout my project work
I also express my gratitude to all the Faculty members my Friends and my
Parents who have helped me to carry out this work Last but not least I thank theAlmighty for his blessing showed on me during this work
JAYADEVANT
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983105983106983123983124983122983105983107983124
983113 983113983118983124983122983119983108983125983107983124983113983119983118 1
11 983105983106983119983125983124 983124983112983109 983113983118983108983125983123983124983122983129 1
12 983105983106983119983125983124 983124983112983109 983107983119983117983120983105983118983129 13
13 983105983106983119983125983124 983124983112983109 983123983124983125983108983129 15
131 983119983106983114983109983107983124983113983126983109983123 983119983110 983124983112983109 983123983124983125983108983129 15
132 983120983109983122983113983119983108 983119983110 983124983112983109 983123983124983125983108983129 15
133 983124983119983119983116983123 983105983118983108 983124983109983107983112983118983113983121983125983109983123 15
134 983123983119983122983107983109983123 983119983110 983108983105983124983105 15
135 983116983113983117983113983124983105983124983113983119983118983123 983119983110 983124983112983109 983123983124983125983108983129 16
983113983113 983122983109983126983113983109983127 983119983110 983116983113983124983109983122983105983124983125983122983109 17
983113983113983113 983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129 22
983113983126 983105983118983105983116983129983123983113983123 amp 983113983118983124983109983122983120983122983109983124983105983124983113983119983118 25
983126 983110983113983118983108983113983118983111983123 65
983126983113 983123983125983111983111983109983123983124983113983119983118983123 71
983126983113983113 983107983119983118983107983116983125983123983113983119983118 72
983106983113983106983116983113983119983111983122983105983120983112983129
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
42 983122983119C 983119F G983119LD 29
43 983122983123I 983119F G983119LD 33
44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
410 983117983119983126I983118G A983126E983122AGE 983119F C983119983120983120E983122 55
411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
983124983144983141 983142983151983148983148983151983159983145983150983143 983137983154983141 983156983144983141 983148983145983155983156 983151983142 983141983160983139983144983137983150983143983141983155 983137983150983140 983139983151983149983149983151983140983145983156983145983141983155 983145983150 983159983144983145983139983144 983142983157983156983157983154983141983155 983139983151983150983156983154983137983139983156983155 983137983154983141 983156983154983137983140983141983140
983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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ACKNOWLEDGEMENT
I extend my deep sense of gratitude and sincere thanks to our principal
DrVGunaraj ME PhD who has given me a wonderful opportunity to
undertake the project work
I wish to express my sincere thanks to DrPVPrabha MBA PhD
Director RVS Institute of Management Studies for supporting my project work
I pay my respectful thanks to our Head of the Department ProfSPreetham
Sridar MBA MPhil (PhD) for encouraging me throughout the course of the
project
I express my sincere thanks to my project guide MrRejish David JoseP
Assistant Professor for the guidance and support in carrying out the project work
I would like to express my sincere thanks to organization guide
MrMohandasBranch Manager for his valuable support and guidance
throughout my project work
I also express my gratitude to all the Faculty members my Friends and my
Parents who have helped me to carry out this work Last but not least I thank theAlmighty for his blessing showed on me during this work
JAYADEVANT
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983124983105983106983116983109 983119983110 983107983119983118983124983109983118983124983123
983107983112983105983120983124983109983122 983118983119 983108983109983123983107983122983113983120983124983113983119983118 983120983105983111983109 983118983119
983116983113983123983124 983119983110 983124983105983106983116983109983123
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983105983106983123983124983122983105983107983124
983113 983113983118983124983122983119983108983125983107983124983113983119983118 1
11 983105983106983119983125983124 983124983112983109 983113983118983108983125983123983124983122983129 1
12 983105983106983119983125983124 983124983112983109 983107983119983117983120983105983118983129 13
13 983105983106983119983125983124 983124983112983109 983123983124983125983108983129 15
131 983119983106983114983109983107983124983113983126983109983123 983119983110 983124983112983109 983123983124983125983108983129 15
132 983120983109983122983113983119983108 983119983110 983124983112983109 983123983124983125983108983129 15
133 983124983119983119983116983123 983105983118983108 983124983109983107983112983118983113983121983125983109983123 15
134 983123983119983122983107983109983123 983119983110 983108983105983124983105 15
135 983116983113983117983113983124983105983124983113983119983118983123 983119983110 983124983112983109 983123983124983125983108983129 16
983113983113 983122983109983126983113983109983127 983119983110 983116983113983124983109983122983105983124983125983122983109 17
983113983113983113 983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129 22
983113983126 983105983118983105983116983129983123983113983123 amp 983113983118983124983109983122983120983122983109983124983105983124983113983119983118 25
983126 983110983113983118983108983113983118983111983123 65
983126983113 983123983125983111983111983109983123983124983113983119983118983123 71
983126983113983113 983107983119983118983107983116983125983123983113983119983118 72
983106983113983106983116983113983119983111983122983105983120983112983129
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
42 983122983119C 983119F G983119LD 29
43 983122983123I 983119F G983119LD 33
44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
410 983117983119983126I983118G A983126E983122AGE 983119F C983119983120983120E983122 55
411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
983124983144983141 983142983151983148983148983151983159983145983150983143 983137983154983141 983156983144983141 983148983145983155983156 983151983142 983141983160983139983144983137983150983143983141983155 983137983150983140 983139983151983149983149983151983140983145983156983145983141983155 983145983150 983159983144983145983139983144 983142983157983156983157983154983141983155 983139983151983150983156983154983137983139983156983155 983137983154983141 983156983154983137983140983141983140
983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
983145983150983156983141983154983150983137983156983145983151983150983137983148 983139983151983150983156983154983137983139983156983155)
2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
983145983150983158983141983155983156983149983141983150983156983155983145983150 983155983141983158983141983154983137983148 983154983141983148983137983156983141983140983138983157983155983145983150983141983155983155983141983155983159983144983145983139983144 983149983137983161 983138983141 983152983151983156983141983150983156983145983137983148 983154983141983158983141983150983157983141 983143983154983151983159983156983144 983140983154983145983158983141983154983155 983124983144983141
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983124983105983106983116983109 983119983110 983107983119983118983124983109983118983124983123
983107983112983105983120983124983109983122 983118983119 983108983109983123983107983122983113983120983124983113983119983118 983120983105983111983109 983118983119
983116983113983123983124 983119983110 983124983105983106983116983109983123
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983105983106983123983124983122983105983107983124
983113 983113983118983124983122983119983108983125983107983124983113983119983118 1
11 983105983106983119983125983124 983124983112983109 983113983118983108983125983123983124983122983129 1
12 983105983106983119983125983124 983124983112983109 983107983119983117983120983105983118983129 13
13 983105983106983119983125983124 983124983112983109 983123983124983125983108983129 15
131 983119983106983114983109983107983124983113983126983109983123 983119983110 983124983112983109 983123983124983125983108983129 15
132 983120983109983122983113983119983108 983119983110 983124983112983109 983123983124983125983108983129 15
133 983124983119983119983116983123 983105983118983108 983124983109983107983112983118983113983121983125983109983123 15
134 983123983119983122983107983109983123 983119983110 983108983105983124983105 15
135 983116983113983117983113983124983105983124983113983119983118983123 983119983110 983124983112983109 983123983124983125983108983129 16
983113983113 983122983109983126983113983109983127 983119983110 983116983113983124983109983122983105983124983125983122983109 17
983113983113983113 983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129 22
983113983126 983105983118983105983116983129983123983113983123 amp 983113983118983124983109983122983120983122983109983124983105983124983113983119983118 25
983126 983110983113983118983108983113983118983111983123 65
983126983113 983123983125983111983111983109983123983124983113983119983118983123 71
983126983113983113 983107983119983118983107983116983125983123983113983119983118 72
983106983113983106983116983113983119983111983122983105983120983112983129
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
42 983122983119C 983119F G983119LD 29
43 983122983123I 983119F G983119LD 33
44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
410 983117983119983126I983118G A983126E983122AGE 983119F C983119983120983120E983122 55
411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983116983113983123983124 983119983110 983124983105983106983116983109983123
983124983105983106983116983109 983118983119 983124983113983124983116983109 983120983105983111983109
983118983119
41 983117983119983126I983118G A983126E983122AGE 983119F G983119LD 25
42 983122983119C 983119F G983119LD 29
43 983122983123I 983119F G983119LD 33
44 983117983119983126I983118G A983126E983122AGE 983119F C983122983125DE 983119IL 35
45 983122983119C 983119F C983122983125DE 983119IL 39
46 983122983123I 983119F C983122983125DE 983119IL 43
47 983117983119983126I983118G A983126E983122AGE 983119F 983123IL983126E983122 45
48 983122983119C 983119F 983123IL983126E983122 49
49 983122983123I 983119F 983123IL983126E983122 53
410 983117983119983126I983118G A983126E983122AGE 983119F C983119983120983120E983122 55
411 983122983119C 983119F C983119983120983120E983122 59
412 983122983123I 983119F C983119983120983120E983122 63
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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1
983116983113983123983124 983119983110 983110983113983111983125983122983109983123
983110983113983111983125983122983109
983118983119983124983113983124983116983109
983120983105983111983109
983118983119
411 Moving Average Chart Of Gold 28
421 ROC Chart Of Gold 32
431 RSI Chart Of Gold 34
441 Moving Average Chart Of crude oil 38
451 ROC Chart of Crude Oil 42
461 RSI Chart Of Crude Oil 44
471 Moving Average Chart Of Silver 48
481 ROC Chart Of Silver 52
491 RSI Chart Of Silver 54
4101 Moving Average Chart Of Copper 58
4111 ROC Chart Of Copper 62
4121 RSI Chart Of Copper 64
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
983124983144983141 983142983151983148983148983151983159983145983150983143 983137983154983141 983156983144983141 983148983145983155983156 983151983142 983141983160983139983144983137983150983143983141983155 983137983150983140 983139983151983149983149983151983140983145983156983145983141983155 983145983150 983159983144983145983139983144 983142983157983156983157983154983141983155 983139983151983150983156983154983137983139983156983155 983137983154983141 983156983154983137983140983141983140
983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
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983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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2
ABSTRACT
The project titled ldquoA STUDY ON PERFORMANCE OF INDIAN COMMODITY
MARKET FOR TOP FOUR COMMODITIES TRADED IN MCX WITH SPECIAL
REFERENCE TO SHARE KHANrdquo is carried out by using some of the tools under which the
ideal commodities for investment could be choosen to make profit The First chapter includes
three main categories The first one is introduction about the industry second one is introduction
about the company and third one the introduction about the study which consisting the
objective of the study scope of the study and limitation of the study Second chapter is the
review of literature which includes the articles and study of the various authors The Third
chapter is research methodology which tells about research design sampling design and toolsused for the study Fourth chapter is analysis amp interpretation and Fifth chapter is finding and
suggestions of study The Sixth chapter consisting of conclusion for the project and followed by
references which were used for the study
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
983124983144983141 983142983151983148983148983151983159983145983150983143 983137983154983141 983156983144983141 983148983145983155983156 983151983142 983141983160983139983144983137983150983143983141983155 983137983150983140 983139983151983149983149983151983140983145983156983145983141983155 983145983150 983159983144983145983139983144 983142983157983156983157983154983141983155 983139983151983150983156983154983137983139983156983155 983137983154983141 983156983154983137983140983141983140
983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
983145983150983156983141983154983150983137983156983145983151983150983137983148 983139983151983150983156983154983137983139983156983155)
2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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983155983157983139983144 983137983155 FID F983157983150983140983155 (983117983137983157983154983145983156983145983157983155) L983145983149983145983156983141983140 (983137983150 983137983142983142983145983148983145983137983156983141 983151983142F983145983140983141983148983145983156983161 I983150983156983141983154983150983137983156983145983151983150983137983148) E983157983154983151983150983141983160983156 983118983126 (983137983150
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
983145983150983158983141983155983156983149983141983150983156983155983145983150 983155983141983158983141983154983137983148 983154983141983148983137983156983141983140983138983157983155983145983150983141983155983155983141983155983159983144983145983139983144 983149983137983161 983138983141 983152983151983156983141983150983156983145983137983148 983154983141983158983141983150983157983141 983143983154983151983159983156983144 983140983154983145983158983141983154983155 983124983144983141
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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3
CHAPTER-1
INTRODUCTION
11 ABOUT THE INDUSTRY
HISTORY
Commodity futures markets largely remain underdeveloped in India This is in spite of the
countrylsquos long history of commodity derivatives trade as compared to the US and UK A major
contributor to this fact is the extensive government intervention in the agricultural sector in the
post-independence era In reality the production and distribution of several agricultural
commodities is still governed by the state and forwards as well as futures trading have only beenselectively introduced with stringent regulatory controls Free trade in many commodity items
remains restricted under the Essential Commodities Act (ECA) 1955 and forwards as well as
future contracts are limited to specific commodity items listed under the Forward Contracts
(Regulation) Act (FCRA) 1952
The evolution of the organized futures market in India commenced in 1875 with the setting up of
the Bombay Cotton Trade Association Ltd Following widespread discontent among leading
cotton mill owners and merchants over the functioning of the Bombay Cotton Trade Association
a separate association Bombay Cotton Exchange Ltd was constituted in 1983 Futures trading
in oilseeds originated with the setting up of the Gujarati VyapariMandali in 1900 which carried
out futures trading in ground nuts castor seeds and cotton The Calcutta Hessian Exchange Ltd
and the East India Jute Association Ltd were set up in 1919 and 1927 respectively for futures
trade in raw jute In 1921 futures in cotton were organized in Mumbai under the auspices of East
India Cotton Association (EICA) Before the Second World War broke out in 1939 several
futures markets in oilseeds were functioning in the states of Gujarat and Punjab Futures markets
in Bullion began in Mumbai in 1920 and later similar markets were established in Rajkot
Jaipur Jamnagar Kanpur Delhi and Calcutta In due course several other exchanges were
established in the country facilitating trade in diverse commodities such as pepper turmeric
potato sugar and jaggery
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
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983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
983145983150983156983141983154983150983137983156983145983151983150983137983148 983139983151983150983156983154983137983139983156983155)
2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
983145983150983158983141983155983156983149983141983150983156983155983145983150 983155983141983158983141983154983137983148 983154983141983148983137983156983141983140983138983157983155983145983150983141983155983155983141983155983159983144983145983139983144 983149983137983161 983138983141 983152983151983156983141983150983156983145983137983148 983154983141983158983141983150983157983141 983143983154983151983159983156983144 983140983154983145983158983141983154983155 983124983144983141
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1981
13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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4
STRUCTURE CONDUCT amp CURRENT STATUS
Broadly the commodities market exists in two distinct formsmdashthe over-the-counter
(OTC) market and the exchange based market Further as in equities there exists the spot and
the derivatives segments Spot markets are essentially OTC markets and participation isrestricted to people who are involved with that commodity such as the farmer processor
wholesaler etc A majority of the derivatives trading takes place through the exchange-based
markets with standardized contracts settlements etc The exchange-based markets are
essentially derivative markets and are similar to equity derivatives in their working that is
everything is standardized and a person can purchase a contract by paying only a percentage of
the contract value A person can also go short on these exchanges Moreover even though there
is a provision for delivery most contracts are squared-off before expiry and are settled in cash
As a result one can see an active participation by people who are not associated with the
commodity
At present there are 26 exchanges operating in India and carrying out futures trading activities in
as many as 146 commodity items As per the recommendation of the FMC the Government of
India recognized the National Multi Commodity Exchange (NMCE) Ahmadabad Multi
Commodity Exchange (MCX) National Commodity and Derivative Exchange (NCDEX)
Mumbai and Indian Commodity Exchange (ICEX) as nation-wide multi-commodity exchanges
As compared to 59 commodities in January 2005 94 commodities were traded in December
2006 in the commodity futures market These commodities included major agricultural
commodities such as rice wheat jute cotton coffee major pulses (such as urad arahar and
chana) edible oilseeds (such as mustard seed coconut oil groundnut oil and sunflower) spices
(pepper chillies cumin seed and turmeric) metals (aluminium tin nickel and copper) bullion
(gold and silver) crude oil natural gas and polymers among others Gold accounted for the
largest share of trade in terms of value A temporary ban was imposed on futures trading in uradand tur dal in January 2007 to ensure orderly market conditions An efficient and well-organised
commodities futures market is generally acknowledged to be helpful in price discovery for
traded commodities
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REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
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K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
983145983156983155 983151983145983148 983137983150983140 983151983145983148983139983137983147983141 983137983150983140 983122BD
983120983137983148983149983151983148983145983141983150
15 983124983144983141 F983145983154983155983156 C983151983149983149983151983140983145983156983145983141983155 E983160983139983144983137983150983143983141 983151983142 I983150983140983145983137
L983156983140 K983151983139983144983145
C983151983152983154983137C983151983139983151983150983157983156 983145983156983155 983151983145983148amp 983151983145983148983139983137983147983141
16 C983141983150983156983154983137983148 I983150983140983145983137 C983151983149983149983141983154983139983141 E983160983139983144983137983150983143983141 L983156983140
G983159983137983148983145983151983154
G983157983154 983137983150983140 983117983157983155983156983137983154983140 983123983141983141983140
17 E983085983123983157983143983137983154 I983150983140983145983137 L983156983140 983117983157983149983138983137983145 983123983157983143983137983154
18 983118983137983156983145983151983150983137983148 983117983157983148983156983145 991251C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 983151983142
I983150983140983145983137 L983156983140 A983144983149983141983140983137983138983137983140
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160 983137983150983140 983122983157983138983138983141983154
983155983157983143983137983154 A983148983157983149983145983150983157983149 983150983145983139983147983141983148 983130983145983150983139C983151983152983152983141983154 L983141983137983140 983156983145983150 983152983141983152983152983141983154 G983154983137983149
983137983150983140 983123983137983139983147983145983150983143
19 C983151983142983142983141983141 F983157983156983157983154983141983155 E983160983139983144983137983150983143983141 I983150983140983145983137
L983156983140B983137983150983143983137983148983151983154983141
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
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TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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983123983156983154983157983139983156983157983154983141 983151983142 983139983151983149983149983151983140983145983156983161 983142983157983156983157983154983141983155
REGULATING BODY
The commodity futures traded i
the Forward Contracts Regulati
for the commodities trading is
comes under the Ministry of Co
983149983137983154983147983141983156983155 983145983150 983113983150983140983145983137
commodity exchanges are regulated by the G
ns Act 1952 and the Rules framed there und
the Forward Markets Commission situated at
sumer Affairs Food and Public Distribution
5
overnment under
er The regulator
Mumbai which
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
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983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
983145983150983156983141983154983150983137983156983145983151983150983137983148 983139983151983150983156983154983137983139983156983155)
2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
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9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
983145983156983155 983151983145983148 983137983150983140 983151983145983148983139983137983147983141 983137983150983140 983122BD
983120983137983148983149983151983148983145983141983150
15 983124983144983141 F983145983154983155983156 C983151983149983149983151983140983145983156983145983141983155 E983160983139983144983137983150983143983141 983151983142 I983150983140983145983137
L983156983140 K983151983139983144983145
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16 C983141983150983156983154983137983148 I983150983140983145983137 C983151983149983149983141983154983139983141 E983160983139983144983137983150983143983141 L983156983140
G983159983137983148983145983151983154
G983157983154 983137983150983140 983117983157983155983156983137983154983140 983123983141983141983140
17 E983085983123983157983143983137983154 I983150983140983145983137 L983156983140 983117983157983149983138983137983145 983123983157983143983137983154
18 983118983137983156983145983151983150983137983148 983117983157983148983156983145 991251C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 983151983142
I983150983140983145983137 L983156983140 A983144983149983141983140983137983138983137983140
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160 983137983150983140 983122983157983138983138983141983154
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19 C983151983142983142983141983141 F983157983156983157983154983141983155 E983160983139983144983137983150983143983141 I983150983140983145983137
L983156983140B983137983150983143983137983148983151983154983141
C983151983142983142983141983141
20 983123983157983154983141983150983140983154983137983150983137983143983137983154 C983151983156983156983151983150 983151983145983148 amp 983119983145983148983155983141983141983140983155
983123983157983154983141983150983140983154983137983150983137983143983137983154
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21 E983085C983151983149983149983151983140983145983156983145983141983155 L983156983140983118983141983159 D983141983148983144983145 983123983157983143983137983154
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24 983118983137983156983145983151983150983137983148 C983151983149983149983151983140983145983156983161 983137983150983140 D983141983154983145983158983137983156983145983151983150
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983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
25 983118983137983156983145983151983150983137983148 983117983157983148983156983145 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
(983118983117CE)
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26 I983150983140983145983137983150 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 ( ICE983128) 983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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10
Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
4) I983150983140983145983137983150 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141(ICE983128) L983145983149983145983156983141983140 983145983155 983137 983155983139983154983141983141983150 983138983137983155983141983140 983151983150983085983148983145983150983141 983140983141983154983145983158983137983156983145983158983141983155 983141983160983139983144983137983150983143983141 983142983151983154
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1981
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such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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6
Forward Markets Commission (FMC)
It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act 1952
Commission consists of minimum two and maximum four members appointed by Central Govt
Out of these members there is one nominated chairman All the exchanges have been set upunder overall control of Forward Market Commission (FMC) of Government of India
COMMODITIES TRADED
bull World-over one will find that a market exits for almost all the commodities known to us
These commodities can be broadly classified into the following
METAL Aluminium Copper Lead Nickel Sponge Iron Steel Long
(Bhavnagar) Steel Long (Govindgarh) Steel Flat Tin Zinc
BULLION Gold Gold HNI Gold M i-gold Silver Silver HNI Silver M
FIBER Cotton L Staple Cotton M Staple Cotton S Staple Cotton
Yarn Kapas
ENERGY Brent Crude Oil Crude Oil Furnace Oil Natural Gas M E
Sour Crude Oil
SPICES Cardamom Jeera Pepper Red Chilli Turmeric
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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7
PLANTATIONS Arecanut Cashew Kernel Coffee (Robusta) Rubber
PULSES Chana Masur Yellow Peas
PETROCHEMICALS HDPE Polypropylene(PP) PVC
OIL amp OIL SEEDS Castor Oil Castor Seeds Coconut Cake Coconut Oil Cotton
Seed Crude Palm Oil Groundnut Oil KapasiaKhalli Mustard
Oil Mustard Seed (Jaipur) Mustard Seed (Sirsa) RBD
Palmolein Refined Soy Oil Refined Sunflower Oil Rice Bran
DOC Rice Bran Refined Oil Sesame Seed Soymeal Soy
Bean Soy Seeds
CEREALS Maize
OTHERS Guargum Guar Seed Gurchaku Mentha Oil Potato
(Agra) Potato (Tarkeshwar) Sugar M-30 Sugar S-30
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8
983113983118983108983113983105983118 983109983128983107983112983105983118983111983109983123
983124983144983141 983142983151983148983148983151983159983145983150983143 983137983154983141 983156983144983141 983148983145983155983156 983151983142 983141983160983139983144983137983150983143983141983155 983137983150983140 983139983151983149983149983151983140983145983156983145983141983155 983145983150 983159983144983145983139983144 983142983157983156983157983154983141983155 983139983151983150983156983154983137983139983156983155 983137983154983141 983156983154983137983140983141983140
983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
983145983150983156983141983154983150983137983156983145983151983150983137983148 983139983151983150983156983154983137983139983156983155)
2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1581
9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1981
13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8
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983145983150 I983150983140983145983137
983123983118983119 E983128CHA983118GE C983119983117983117983119DI983124983129
1 I983150983140983145983137 983152983141983152983152983141983154 amp 983123983152983145983139983141 983124983154983137983140983141 A983155983155983151983139983145983137983156983145983151983150
K983151983139983144983145(I983120983123983124A)
983120983141983152983152983141983154 (983138983151983156983144 983140983151983149983141983155983156983145983139 983137983150983140
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2 983126983145983146983137983161 B983141983151983152983137983154 983139983144983137983149983138983141983154 L983156983140 983117983157983162983137983142983142983137983154983150983137983143983137983154 G983157983154
3 983122983137983146983140983144983137983150983145 983151983145983148 amp 983151983145983148983155983141983141983140 983141983160983139983144983137983150983143983141 983148983156983140 D983141983148983144983145 G983157983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp
983151983145983148983139983137983147983141
4 B983144983137983156983145983150983140983137 983119983149 amp 983151983145983148 983141983160983139983144983137983150983143983141 983148983156983140 B983144983137983150983156983137983140983137 G9831579831545 983124983144983141 983139983144983137983149983138983141983154 983151983142 983139983151983149983149983141983154983139983141 H983137983152983157983154 G983157983154 983152983151983156983137983156983151983141983155 983137983150983140 983117983157983155983156983137983154983140 983155983141983141983140
6 983124983144983141 983117983141983141983154983157983156 A983143983154983151 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
983148983156983140 983117983141983141983154983157983156
G983157983154
7 983124983144983141 B983151983149983138983137983161 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140
B983151983149983138983137983161
983119983145983148983155983141983141983140 983139983151983149983152983148983141983160
8 983122983137983146983147983151983156 983155983141983141983140983155 983151983145983148 amp B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155
A983155983155983151983139983145983137983156983145983151983150 983122983137983146983147983151983156
C983137983155983156983154983151983148 983155983141983141983140 G983154983151983157983150983140 983150983157983156 983145983156983155 983151983145983148
amp 983139983137983147983141 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148 amp983139983137983147983141
983139983151983156983156983151983150 amp 983122BD 983120983137983148983149983151983148983141983145983150
9 983124983144983141 A983144983149983141983140983137983138983137983140 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
A983144983149983141983140983137983138983137983140
C983137983155983156983154983151983148 983155983141983141983140 983139983151983156983156983151983150983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983151983145983148983139983137983147983141
10 983124983144983141 E983137983155983156 I983150983140983145983137 J983157983156983141 ampH983157983155983155983145983137983150 E983160983139983144983137983150983143983141 L983156983140
C983137983148983139983157983156983156983137
H983141983155983155983145983137983150 amp 983155983137983139983147983145983150983143
11 983124983144983141 E983137983155983156 I983150983140983145983137 983139983151983156983156983151983150 A983155983155983151983139983145983137983156983145983151983150 L983156983140
C983137983148983139983157983156983156983137
C983151983156983156983151983150
12 983124983144983141 983123983152983145983139983141983155 amp 983119983145983148983155983141983141983140983155 E983160983139983144983137983150983143983141 L983156983140 983123983137983150983143983148983145 983124983157983154983149983141983154983145983139
13 K983137983150983152983157983154 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 L983156983140 K983137983150983152983157983154 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148
983137983150983140 983139983137983147983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
983145983156983155 983151983145983148 983137983150983140 983151983145983148983139983137983147983141 983137983150983140 983122BD
983120983137983148983149983151983148983145983141983150
15 983124983144983141 F983145983154983155983156 C983151983149983149983151983140983145983156983145983141983155 E983160983139983144983137983150983143983141 983151983142 I983150983140983145983137
L983156983140 K983151983139983144983145
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G983159983137983148983145983151983154
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L983156983140B983137983150983143983137983148983151983154983141
C983151983142983142983141983141
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983123983157983154983141983150983140983154983137983150983137983143983137983154
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21 E983085C983151983149983149983151983140983145983156983145983141983155 L983156983140983118983141983159 D983141983148983144983145 983123983157983143983137983154
22 B983157983148983148983145983151983150 983117983141983154983139983144983137983150983156983155 A983155983155983151983139983145983137983156983145983151983150 B983145983147983137983150983141983154 983117983157983155983156983137983154983140 983155983141983141983140 983145983156983155 983151983145983148 amp 983151983145983148983139983137983147983141
23 983117983157983148983156983145 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 (983117C983128) 983117983157983149983138983137983145 983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
24 983118983137983156983145983151983150983137983148 C983151983149983149983151983140983145983156983161 983137983150983140 D983141983154983145983158983137983156983145983151983150
E983160983139983144983137983150983143983141 ( 983118CDE983128) 983117983157983149983138983137983145
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25 983118983137983156983145983151983150983137983148 983117983157983148983156983145 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141
(983118983117CE)
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26 I983150983140983145983137983150 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141 ( ICE983128) 983117983141983156983137983148983155 ampA983143983154983145 C983151983149983149983151983140983145983156983145983141983155
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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10
Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1981
13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 4181
35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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9
14 983118983137983156983145983151983150983137983148 B983151983137983154983140 983151983142 983156983154983137983140983141 I983150983140983151983154983141 983123983151983161983137 983155983141983141983140 983123983151983161983137 983151983145983148 983137983150983140 983123983151983161983137
983149983141983137983148983155 983122983137983152983141983155983141983141983140983117983157983155983156983137983154983140 983155983141983141983140
983145983156983155 983151983145983148 983137983150983140 983151983145983148983139983137983147983141 983137983150983140 983122BD
983120983137983148983149983151983148983145983141983150
15 983124983144983141 F983145983154983155983156 C983151983149983149983151983140983145983156983145983141983155 E983160983139983144983137983150983143983141 983151983142 I983150983140983145983137
L983156983140 K983151983139983144983145
C983151983152983154983137C983151983139983151983150983157983156 983145983156983155 983151983145983148amp 983151983145983148983139983137983147983141
16 C983141983150983156983154983137983148 I983150983140983145983137 C983151983149983149983141983154983139983141 E983160983139983144983137983150983143983141 L983156983140
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Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
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983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
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TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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10
Major national commodity exchange
1) National Multi Commodity Exchange of India Ltd (NMCE) was promoted bycommodity
relevant public institutions viz Central Warehousing Corporation (CWC)National Agricultural
Cooperative Marketing Federation of India (NAFED) Gujarat Agro-Industries CorporationLimited (GAICL) Gujarat State Agricultural Marketing Board (GSAMB)National Institute of
Agricultural Marketing (NIAM) and Neptune Overseas Limited (NOL)While various integral
aspects of commodity economy viz warehousing cooperativesprivate and public sector
marketing of agricultural commodities research and training wereadequately addressed in
structuring of the Exchange finance was a vital missing link Punjab National Bank (PNB) took
equity of the Exchange to establish that linkage
2) National Commodity amp Derivatives Exchange Limited (NCDEX) is a professionallymanaged
on-line multi commodity exchange promoted by ICICI Bank Limited Life InsuranceCorporation
of India (LIC) National Bank for Agriculture and Rural Development (NABARD)and National
Stock Exchange of India Limited (NSE) Canara Bank Credit Rating InformationServices of
India Limited (CRISIL) Goldman Sachs Indian Farmers Fertilizer CooperativeLimited (IFFCO)
and Punjab National Bank (PNB) by subscribing to the equity shares havejoined the initial
promoters as shareholders of the Exchange NCDEX is the only commodityexchange in the
country promoted by national level institutions
3) MCX is an independent and de-mutualised multi commodity exchange promoted bymajor
financial institutions like Financial Technologies Ltd State Bank of India and itsassociates
National Bank for Agriculture and Rural Development (NABARD) National Stock Exchange of
India Ltd (NSE) Fid Fund (Mauritius) Ltd Corporation Bank Union Bank ofIndia Canara
Bank Bank of India Bank of Baroda HDFC Bank and SBI Life Insurance CoLtd
4) I983150983140983145983137983150 C983151983149983149983151983140983145983156983161 E983160983139983144983137983150983143983141(ICE983128) L983145983149983145983156983141983140 983145983155 983137 983155983139983154983141983141983150 983138983137983155983141983140 983151983150983085983148983145983150983141 983140983141983154983145983158983137983156983145983158983141983155 983141983160983139983144983137983150983143983141 983142983151983154
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11
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 1881
12
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983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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11
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983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
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TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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12
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983142983151983148983148983151983159983145983150983143 983139983144983137983154983156 983155983144983151983159983155 983156983144983141 983155983156983154983137983156983141983143983145983139 983145983150983158983141983155983156983149983141983150983156983155
983119983150 J983157983150983141 7 2005 983117C983128 983148983137983157983150983139983144983141983140 983156983144983141 983117C983128C983119983117DE983128 983159983144983145983139983144 983145983155 I983150983140983145983137991256983155 983142983145983154983155983156 983139983151983149983152983151983155983145983156983141 983139983151983149983149983151983140983145983156983161
983142983157983156983157983154983141983155 983152983154983145983139983141 983145983150983140983141983160 983137983148983151983150983143 983159983145983156983144 983156983144983154983141983141 983143983154983151983157983152983145983150983140983145983139983141983155 983124983144983141 983117C983128C983119983117DE983128 983139983151983149983152983154983145983155983141983155 983139983151983149983149983151983140983145983156983145983141983155
983145983150983139983148983157983140983141983140 983145983150 983156983144983141 983156983144983154983141983141983143983154983151983157983152 983145983150983140983145983139983141983155 983150983137983149983141983148983161 983117C983128A983143983154983145 983117C983128983117983141983156983137983148 983137983150983140 983117C983128E983150983141983154983143983161
983124983144983141983139983151983149983149983151983140983145983156983145983141983155 983145983150983139983148983157983140983141983140 983145983150 983141983137983139983144 983145983150983140983141983160 983144983137983158983141 983138983141983141983150 983155983141983148983141983139983156983141983140 983151983150 983156983144983141 983138983137983155983145983155 983151983142983156983144983141983145983154 983141983139983151983150983151983149983145983139
983145983149983152983151983154983156983137983150983139983141 983145983150 983156983141983154983149983155 983151983142 983156983144983141983145983154 983152983144983161983155983145983139983137983148 983149983137983154983147983141983156 983155983145983162983141 983145983150 983156983144983141I983150983140983145983137983150 983141983139983151983150983151983149983161 983137983150983140 983156983144983141 983156983157983154983150983151983158983141983154 983142983151983154
983141983137983139983144 983151983142 983156983144983141983155983141 983139983151983149983149983151983140983145983156983145983141983155
Key commodities traded in MCX
1 Gold
As the oldest precious metal known to man gold has served as a global currency and commodity
for thousands of years Gold is unique as it is both a commodity as well as a financial asset It is
also widely considered as a hedge against inflation The total above ground stocks of gold is
estimated to be around 163000 tonnes by Gold Fields Minerals Services (GFMS) as on end of2008 Out of this total stock 51 is estimated to be present as jewellery 18 as official
reserves 17 held as investment 12 used for industrial purposes and 2 is unaccounted for
India is the worlds largest consumer of gold Indians normally buy about 25 per cent of the
worlds gold purchasing around 700 - 750 tons of gold every year
Indian gold prices are highly correlated with international prices However the fluctuations in
the INR-US Dollar exchange rate impacts domestic gold prices and have to be closely followed
The global gold prices are driven by a host of factors such as macro-economic factors like
strength of the economy rising importance of emerging markets currency movements and
interest rates being the major influencing factors Supply-demand is also a major influencer
amid rising global investor demand and almost stable supplies Shifts in official gold reserves
reports of sales or purchases by central banks act as major price influencing factors whenever
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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13
such reports appear The investment in gold is also influenced by comparative returns from other
markets like stock markets real estate other commodities like crude oil Domestically demand
and consequently prices to some extent are influenced by seasonal factors like marriages The
rural demand is influenced by monsoon agricultural output and health of the rural economy
2 Silver
Silvers unique properties make it a very useful Industrial Commodity despite it being classed
as a precious metal Demand for silver is built on three main pillars industrial uses photography
and Jewellery amp silverware accounting for 342 205 and 259 million ounces respectively in
2002 Just over half of mined silver comes from Mexico Peru and United States respectively
the first second and fourth largest producing countries The third largest is Australia Primarymines produce about 27 percentage of world silver while around 73 percentage comes as a by-
product of gold copper lead and zinc mining
The price of silver is not only a function of its primary output but more a function of the price of
other metals also as world mine production is more a function of the prices of other metals The
tie between silver and economic activity is strong given that around two-thirds of total silver
fabrication is in the industrial and photographic sectors Often a faster growth in demand against
supply leads to drop in stocks with government and investors Economically viable primary
silver mine is a function of the world silver price level
3 Copper
Copper ranks third in world metal consumption after steel and aluminum It is a product whose
fortunes directly reflect the state of the worlds economy Copper is the best non- precious metal
conductor of electricity The metals exceptional strength ductility and resistance to creepingand corrosion makes it the preferred and safest conductor for building wiring Copper is also
used in power cables either insulated or uninsulated for high medium and low voltage
applications Copper is an essential component of energy efficient motors and transformers and
automobiles
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
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SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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14
Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day The
world copper production through exploration of new mines and expansion of existing mines also
influence copper prices Price of copper is also heavily influenced by the economic growth and
demand in major consuming countries such as China Japan Germany etc
4Crude Oil
Crude oil is a mixture of hydrocarbons that exists in a liquid phase in natural underground
reservoirs Oil and gas account for about 60 per cent of the total worlds primary energy
consumption Almost all industries including agriculture are dependent on oil in one way or
other Oil amp lubricants transportation petrochemicals pesticides and insecticides paints
perfumes etc are largely and directly affected by the oil pricesThe prices of crude oil are highly volatile High oil prices lead to inflation that in turn increases
input costs reduces non-oil demand and lower investment in net oil importing countries
India ranks among the top 10 largest oil-consuming countries Oil accounts for about 30 per cent
of Indias total energy consumption The countrys total oil consumption is about 22 million
barrels per day India imports about 70 per cent of its total oil consumption and it makes no
exports India faces a large supply deficit as domestic oil production is unlikely to keep pace
with demand Indias rough production was only 08 million barrels per day The oil reserves of
the country (about 54 billion barrels) are located primarily in Mumbai High Upper Assam
Cambay Krishna-Godavari and Cauvery basins Balance recoverable reserve was about 733
million tonnes (in 2003) of which offshore was 394 million tones and on shore was 339 million
tonnes India had a total of 21 million barrels per day in refining capacity Government has
permitted foreign participation in oil exploration an activity restricted earlier to state owned
entities Indian government in 2002 officially ended the Administered Pricing Mechanism
(APM) Now crude price is having a high correlation with the international market price As ondate even the prices of crude bi-products are allowed to vary 10 keeping in line with
international crude price subject to certain government laid down norms formulae
Disinvestmentrestructuring of public sector units and complete deregulation of Indian retail
petroleum products sector is under way
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
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TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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15
12 ABOUT THE COMPANY
Sharekhan Ltd
Sharekhan is a firm which is working under SSKI (S S Kantilal Ishwarlal) LtdSSKI was
founded in 1922 SSKI is One of Indiarsquos Oldest Brokerage Houses having eight decades of
experience into-
bull Institutional Broking
bull Investment Banking
bull Retail Broking
It is one of the Founding members of the Stock Exchange Mumbai and Pioneer Institutional
Broker
SSKI Retail Broking
SSKI entered into Retail Broking in 1985 Share khan is the Retail Broking Armof the BIG 80
Years old organization ie of SSKI and ldquoSharekhanrdquo is the Brand Name given to its Retail
Business SSKI carries out its Retail Broking Activities under Sharekhan Brand Name
Sharekhan is One of Indiarsquos Leading Broking Houses They Provides a Complete Life-Cycle of
Investment Solutions in Equities DerivativesCommodities amp Depository Services
Sharekhan is having its retail presence across India through ndash
Sharekhan Outlets act as Full Service Investment Solutions Provider providingyou wide range
of services like ndash
bull Equity amp Derivatives Trading on NSE and BSE
bull Online Trading
bull Commodities Trading on MCX amp NCDEX
bull Portfolio Management Services
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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16
bull Depository Services
bull IPO Services
bull Wide Range of Customized Research Products
As a sub member of NSE BSE MCX NCDEX NSDL and CDSL which are pioneers in the
respective operations sharekhan is having more than 500 branches in all over India
Share khan Indiarsquos leading stock broker is the retail arm of SSKI an organization
with over eighty years of experience in the stock market with more than 280 share shops in 120
cities and big towns a nd premi er onli ne tr ading destination
Vision
To be the best retail brokering Brand in the retail business of stock market
Mission
bull To educate and empower the individual investor to make better investment decisions
through quality advice and superior service
bull To Respond the progressive globalization and achieving international standards
bull To attain efficiency and effectiveness built on ethical practices
bull To become No 1 player in online trading business
bull To establish largest network of branded broking outlets in the country serving morethan
700000 clients
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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17
13 ABOUT THE STUDY
131 OBJECTIVES OF THE STUDY
bull PRIMARY OBJECTIVE
bull To study the performance of Indian commodity market for top four commodities traded
in MCX with special reference to Share Khan
bull SECONDARY OBJECTIEVES
bull To study the trend of price movement of commodities
bull To analyse the volatility of selected commodities
bull To analyse the variation of the closing price for each month in the selected years
132 PERIOD OF THE STUDY
Time period of the study is 3 consequent financial years from 2010 to 2013
133 TOOLS AND TECHNIQUES
bull Moving average
bull Rate Of Change
bull Relative Strength Index
134 SOURCES OF DATA
Data are collected from secondary sources like journalswebsite etc
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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18
135 LIMITATION OF THE STUDY
bull The study is confined only to selected commodities
bull Data were collected from secondary sources like journals and websites
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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19
CHAPTER-II
REVIEW OF LITERATURE
There are few studies on the performance and efficiency of Indian commodity derivatives
market Despite a considerable amount of empirical literature there is no general consensus on
whether or not the markets are efficient
The study of Kaminsky (1989) in the context of US Commodity markets suggests that for certain
commodity expected to excess returns to future speculation are non-zero though other
researchers also argue that these results do not necessarily imply that markets are inefficient
Mishra (2008) observed that during the period 2003-08 the Indian stocks as well as commoditymarkets have grown considerably The studies have explored the advantages of adding
commodities to a portfolio of equities in Indian context Bose (2007) found that Indian stock
markets are more volatile as compared to developed markets and Indian commodity future
markets are going through many ups and downs and allegations of speculative activity have been
made
Slade and Thille (2004) assessed the levels and volatilities (means and standard deviations) of
the spot prices of the six commodities that were traded on the London Metal Exchange in the1990s The theories that they examined could be grouped into four classes The first considered
how productndashmarket structure and forwardndashmarket trading jointly affect the spotndashmarket game
the second explored the links between productndash market structure and spotndashprice stability the
third assessed whether forward trading destabilizes spot prices and the last related the arrival of
new information to price volatility and the volume of trade They found support for traditional
marketndashstructure models of the price level but not of price stability In addition increased
forward trading was associated with lower prices
The efficiency test of agricultural commodity future market was also done in China by
Wang (2005) and Bingfanke (2005) and the results suggested a long term relationship between
the future price and spot price for Soya beans and weak short term efficiency in Soya bean
future market The study also highlighted inefficient future market for wheat and suggested that
it may have been caused by over speculation and government intervention Sahi (2006) studied
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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20
the impact of introducing futures contracts on the volatility of the underlying commodities in
India He found that unexpected increase in futures activity in terms of rise in volumes and open
interest has caused increase in cash price volatilities suggesting that futures trading had a
destabilizing effect on spot prices of commodities
A study by Lokare (2007) found that although Indian commodity market is yet to achieve
minimum critical liquidity in some commodities almost all the commodities show an evidence
of association between spot and future prices revealing the right direction of achieving the
improved operational efficiency though at a slower rate However for a few commodities
the volatility in future price has been substantially lower than the spot price indicating an
inefficient utilization of information
Whether commodity futures prices lead spot prices began with Garbade and Silber (1983) who
tested whether a change in the basis of the previous time period was correlated with a change in
the spot or futures prices of the current time period If basis innovations forecast futures returns
then the spot market can be said to lead the futures market On the contrary if basis innovations
exactly forecast spot returns then this would imply that the spot market is a pure satellite of the
futures market If each set of prices is seen to predict the other it is taken as evidence of bi-
directional causality ie a clear case of information flowing from each market to the other and
prices being adjusted accordingly With improvements in econometric techniques these tests
have been extended in several directions These extensions include considering a longer lag
structure
However Nitesh (2005) studied the implications of soy oil futures in Indian markets using
simple volatility measures and concluded that the futures trading was effective in reducing
seasonal price volatilities but did not brought down daily price volatilities significantly
Some of the Indian researches have not only studied the efficiency of commodity future marketsof India but also analysed its effects on social welfare and inflation on Indian economy The
results showed that commodity future markets are not efficient in the short run Also the growth
in commodity futures markets leads to disadvantages to society in terms of significant increase in
inflation (Sahi Kaizada 2006) In addition Gary B Gorton (2005) and Rouwenhorst (2005)
stated that commodity futures are positively correlated with inflation
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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21
The literature review reflects that there has been some work regarding fluctuation and volatility
in commodity market and also many researchers have discussed hedging as risk minimization
tool Review of literature on commodity futures markets indicate that while there has been
widespread research on technical questions the research has had inefficient economic content
There is a need to contribute to the academic literature by studying the relation between
commodity spot and future prices The paper attempts to draw lights on performance and ad
efficiency of commodity market with special reference to top six commodities traded in MCX
According to Sahadevan the Sagging Agricultural Commodity Exchanges - Growth Constraints
and Revival Policy Options ldquoCommodity derivatives have a crucial role to play in managing
price risk especially in agriculture dominated economies However they have been utilized in a
very limited scale in India As long as prices of many commodities are restrained to certain
extent by Government intervention in production supply and distribution forwards and futures
markets for hedging rice risk in those commodities have only limited practical relevance A
review of the nature of institutional and policy level constraints facing this segment calls for
more focused and pragmatic approach from government the regulator and the exchanges for
making the agricultural futures markets a vibrant segment for risk managementrdquo
According to Peter Gibbon Danish Institute for International Studies Copenhagen The
commodity question new thinking on old problems - ldquoThis paper reviews more and less
mainstream policy options in relation to the bdquocommodity question in the light both of its
classical definition and of the emerging concern about oligopoly It begins by updating the
evidence concerning commodity price decline and volatility and examining the implications of
these phenomena for macro-economic performance and livelihoods in producing countriesrdquo
According to Stephen CraigThe Self-Regulation of Commodity Exchanges The Case of
Market Manipulation-ldquoThe paper deals with Price dissemination that every Mandy becomes a
monopoly to the local producers especially once they come to the market Farmers typically face
a short period between the time that they harvest and the time that they can sell the croprdquo
According to Katherine Dusak Futures Trading and Investor Returns An Investigation of
Commodity Market Risk Premiums ldquoThe long-standing controversy over whether speculators in
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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22
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by harpe Lintner and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zero in all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Susan Thomas Agricultural commodity markets in India-Policy issues for growth
ldquoStrengthening institutions in spot and derivative markets for commodities is a necessary
ingredient of the liberalization process in agriculture and can impact upon the lives of millions
This paper describes the existing market design prevalent on both the spot and the futures
markets This show some evidence on the role played by the nascent futures markets in price
discovery Document the problems of both the spot and the futures markets The paper offer
three policy proposals using reference rates for strengthening transparency exploring a greater
role for cash settlement and treating warehouse receipts as securitiesrdquo
According to Chua Jess H Gordon Sick and Richard S Woodward (1990) Diversifying with
Gold Stocks ldquoThe authors extend Jaffersquos (1989) study by examining the relative investment
benefits of investing in gold equities versus gold bullion during the period September 1971
through December 1988 By splitting their sample period into two sub periods the authors show
that the diversification benefits of gold bullion are much more consistent than the diversification
benefits of gold equities In particular they find that the beta of gold equities more than doubled
between the 1970s and 1980s whereas the beta of gold bullion remained largely unchanged at
approximately zero in both periods Thus the authors question the diversification benefits of
gold equities particularly over shortinvestment horizonsrdquo
According to Dusak Katherine (1973) Futures Trading and Investor Returns An Investigationof Commodity Market Risk Premiums Journal of Political Economy Vol 81 No 6
(NovemberDecember) 1387-1406 ldquoThe long-standing controversy over whether speculators in
a futures market earn a risk premium is analyzed within the context of the capital asset pricing
model recently developed by Sharpe Linter and others Under that approach the risk premium
required on a futures contract should depend not on the variability of prices but on the extent to
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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23
which the variations in prices are systematically related to variations in the return on total wealth
The systematic risk was estimated for a sample of wheat corn and soybean futures contracts
over the period 1952 to 1967 and found to be close to zeroin all three cases Average realized
holding period returns on the contracts over the same period were close to zerordquo
According to Edwards Franklin R and Jimmy Liew (1999) Managed Commodity Futures
Journal of Futures Markets Vol19 No4 (June) 377-411 ldquoThe authors examine the
performance of managed commodity futures as represented by public commodity funds
commodity pool operators and commodity trading advisers The authors indicates that the costs
associated with investing in CPOs and CTAs may be quite large because the funds may incur
significant transaction costs which are added to a number of fees charged to investors including
management fees profit-based incentive fees and loads Despite these relatively high costs the
authors find that the net return to commodity fund investments is frequently relatively attractive
Each individual fund however has relatively volatile returns so the stand-alone performance of
managed commodity futures is poor relative to traditional investments The authors find that in
general adding a portfolio of CPOs or CTAs to a traditional investment portfolio enhances
portfolio performance In addition the authors compare the returns to CTAs and CPOs with the
returns to the passive ReutersJefferies CRB Index and the MLM The MLM is a dynamic index
based on momentum in commodity prices which is consistent with the strategy followed by
many managed futures funds The authors find a significant positive relationship between the
returns to managed futures and the MLM but no significant relationship between managed funds
and the CRB This finding is consistent with the contention that the MLM provides a general
indicator of the performance of managed futures The authors also find however that neither the
MLM nor the CRB supplants managed futures in their derived efficient portfoliosrdquo
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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24
983107983112983105983120983124983109983122983085983113983113983113
983122983109983123983109983105983122983107983112 983117983109983124983112983119983108983119983116983119983111983129
The methodologies used for the study are the following
31 Research design
bull The research design used in the study is analytical In analytical research the researcher
has to use facts or information already available and analyse these to make a critical
evaluation of material So the research has to analyse the commodity future and spot
closing prices which is a historical data and derive conclusions from it
bull Universe
bull The segment identified for conducting the study is MCX Samples are selected on the
basis of top traded commodities in MCX Market capitalisation is the basis for
understanding the top traded commodities
bull Sampling design
bull MCX offers more than 40 commodities across various segments such as Bullion Ferrous
and Non-Ferrous metals Energy and a number of Agri-commodities on its platform
Among these commodities are selected on the basis of top traded in MCX
32 Samples
Four commodities are selected they are
bull Gold
bull Silver
bull Crude oil
bull Copper
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33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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25
33 TOOLS FOR ANALYSIS
Technical analysis is used for this study
TECHNICAL ANALYSIS
Technical analysis is a forecasting method of price movements using past prices volume and
open interest Technical analysis includes a variety of forecasting techniques such as chart
analysis pattern recognition analysis seasonality and cycle analysis and computerized technical
trading systems However academic research on technical analysis is generally limited to
techniques that can be expressed in mathematical forms namely technical trading systems
although some recent studies attempt to test visual chart patterns using pattern recognition
algorithms A technical trading system consists of a set of trading rules that result from
parameterizations and each trading rule generates trading signals (long short or out of market)
according to their parameter values Several popular technical trading systems are moving
averages channels and momentum oscillators
Tools for Technical analysis
bull Rate of change indicator (ROC)
bull Relative strength index (RSI)
bull Moving average
331 Rate of change indicator (ROC)
The Rate of Change indicator (ROC) is a way of showing how rapidly the price of a particular
share (or other financial instrument) is moving Rate of Change or ROC is a technical indicator
that measures the changes between the percentage compared to the most recent price and the
price for n periods in the past It is also said that it monitors the momentum of the market It
estimates the marketrsquos rate of change comparative to the previous trading intervals In the highest
level the indicator might say a market is quite overbought Valleys or troughs also point out an
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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26
oversold market situation It has a horizontal median called equilibrium It is this median that
tells us everything we need to know about this type of rate
332 Relative strength index (RSI)
The Relative Strength Index (RSI) is one of the powerful Oscillators which indicate market
movement much before such movement takes place Under RSI gains and losses of the prices
over the immediate previous daysrsquo price for a certain period is calculated Market always moves
southward after an overbought situation and it moves northward after an oversold situation
Relative strength also refers to the strength of a security in relation to its sector or the overall
market
RSI=100-[100 (1+RS)]
RS = Average of n periods price gains Average of n periods price losses
RSI ranges from 0 to 100 An asset is deemed to be overbought once the RSI approaches the 70
level meaning that it may be getting overvalued and is a good candidate for a pullback
333 Moving average
In statistics a moving average also called rolling average rolling mean or running average is a
type of finite impulse response filter used to analyze a set of data points by creating a series of
averages of different subsets of the full data set A moving average is not a single number but it
is a set of numbers each of which is the average of the corresponding subset of a larger set of
data points it is used in technical analysis of financial data like stock prices returns or trading
volumes
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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27
983107983112983105983120983124983109983122983085983113983126
DATA ANALYSIS AND INTERPRETATION
TABLE 41 MOVING AVERAGE OF GOLD
Date Closing price (Rs) 5 Months Moving
Average
142010 16295
152010 17125
162010 18385
172010 18852
182010 17770
192010 19134 176854
1102010 19035 182532
1112010 19807 186352
1122010 20919 19333
112011 21127 200044
122011 20334 202444
132011 21348 20707
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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28
142011 20934 209324
252011 22626 212738
162011 22460 215404
172011 21628 217992
182011 23176 221648
192011 27215 23421
1102011 26031 24102
1112011 27575 25125
1122011 28888 26577
212012 27382 274182
122012 28083 275918
132012 27925 279706
242012 28932 28242
152012 29510 283664
162012 29994 288888
272012 29660 292042
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
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TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
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TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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29
182012 30014 29622
192012 31342 30104
1102012 31415 30485
1112012 30952 306766
1122012 31563 310572
112013 30888 31232
122013 30599 310834
132013 29740 307484
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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30
FIGURE 411 Moving Average Chart Of Gold
INTERPRETATION
A short term moving average is used to predict near future movement and taking decision for
short time periodThe closing price is always above the moving average lineIt indicates the
buying signal for the commodity But in the starting of 2013 the price started to decline below
the moving average which indicates a selling signal for the commodity
0
5000
10000
15000
20000
25000
30000
35000
C983148983151983155983145983150983143 983152983154983145983139
983117983151983158983145983150983143 983137983158983141
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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31
TABLE 42 ROC OF GOLD
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1168149739
1122010 1156613139
112011 1137829753
122011 1120676851
132011 1144288126
142011 1115710254
252011 1099763593
162011 1142323421
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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32
172011 1073665089
182011 1023713731
192011 1139765909
1102011 1274826682
1112011 1243479507
1122011 1218730664
212012 1286197685
122012 1266044017
132012 1211727649
242012 1026088554
152012 1111444047
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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34
FIGURE 421 ROC Chart Of Gold
INTERPRETATION
In this ROC chart of gold the ROC line is above the 120 line in the peroid between 192011
and 122012 and it represented a bullish marketThen it started to decline and reached near to a
point of 100 which represents the bearish market
0
20
40
60
80
100
120
140
983122983119983107
983122983119C
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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35
TABLE 43 RSI OF GOLD
YEAR RSI
2010-2011 78066
2011-2012 71776
2012-2013 62853
RSI=100-(1001+RS)
RS=AverageGainDay
Average lossDay
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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36
FIGURE 431 RSI Chart Of Gold
INTERPRETATION
This RSI graph is showing that the RSI values are above 80 mark and keep going upward in
2010-2011 It indicates that market is likely to move upwardBut in the financial year 2012-2013
it started to decline and going below to 50 point line One should take precaution or a risk
adverse investor can sell at this movement
0
10
20
30
40
50
60
70
80
90
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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37
TABLE 44 MOVING AVERAGE OF CRUDE OIL
Date Closing price (Rs) Moving average
142010 3751
152010 3814
162010 3464
172010 3523
182010 3654
192010 3449 36412
1102010 3591 35808
1112010 3630 35362
1122010 4098 35694
112011 4358 36844
122011 4500 38252
132011 4628 40354
142011 4845 42428
252011 5055 44858
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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38
162011 4512 46772
172011 4240 4708
182011 4207 4656
192011 4095 45718
1102011 3933 44218
1112011 4493 41974
1122011 5115 41936
212012 5325 43686
122012 4861 45922
132012 5334 47454
242012 5464 50256
152012 5684 52198
162012 4671 53336
272012 4636 52028
182012 5020 51578
192012 5379 5095
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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39
1102012 4890 5078
1112012 4697 49192
1122012 4905 49244
112013 5076 49782
122013 5182 49894
132013 5017 4950
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
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40
FIGURE 441 Moving Average Chart Of crude oil
INTERPRETATION
In the financial year 2010-2011the closing price is above the moving average line and it
represents bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average
lineIn this case the investor may not be able to predict about the futureSo he can better sell thecommodity
0
1000
2000
3000
4000
5000
6000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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41
TABLE 45 ROC OF CRUDE OIL
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 9573447081
1122010 9517566859
112011 1183025404
122011 1237013909
132011 1231527094
142011 1341838214
252011 1349206349
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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42
162011 1392561983
172011 110102489
182011 9729233593
192011 9348888889
1102011 8848314607
1112011 8117647059
1122011 8888229476
212012 1133643617
122012 1255896226
132012 1155455194
242012 1302564103
152012 1389270277
162012 1265079012
272012 9131964809
182012 8706103286
192012 1032709319
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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43
1102012 1008436445
1112012 8949487555
1122012 8263546798
112013 1050096339
122013 1094909405
132013 1032270916
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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44
FIGURE 451 ROC Chart of Crude Oil
INTERPRETATION
In this ROC chart on 13201125201116 2011 amp 112012 the line touched 120 point and on
242012 the line touched 140 pointAnd after that the line started to decline and reached near to
80 point markSo the investor can better sell the commodity
020406080
100120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
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55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5181
45
TABLE 46 RSI Of Crude Oil
YEAR RSI
2010-2011 72068
2011-2012 5902
2012-2013 45415
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5281
46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5381
47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5481
48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5681
50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5281
46
FIGURE 461 RSI Chart Of Crude Oil
INTERPRETATION
In 2010-2011 the RSI has touched the 80 point line which represents an upward trend But after
that in 2011-2012 it has declined and reached 50 point line and in 2012-2013 it kept decreasing
and going down to 40 point line A downward trend can be estimated from this
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5381
47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5481
48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5681
50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
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8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5381
47
TABLE 47 MOVING AVERAGE OF SILVER
Date Closing price (Rs) Moving average
142010 26935
152010 28304
162010 29292
172010 29604
182010 28636
192010 30915 285542
1102010 32962 293502
1112010 37105 302818
1122010 43009 318444
112011 46311 345254
122011 44361 380604
132011 52631 407496
142011 57140 446834
252011 69135 486904
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5481
48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5681
50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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48
162011 58515 539156
172011 52193 563564
182011 61082 579228
192011 65437 59613
1102011 54522 612724
1112011 57911 583498
1122011 58517 58229
212012 53325 594938
122012 59238 579424
132012 61667 567026
242012 60743 581316
152012 58552 58698
162012 55803
58705
272012 53513 592006
182012 54924 580556
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5581
49
192012 60979 56707
1102012 62934 567542
1112012 59695 576306
1122012 63351 58409
112013 57918 603766
122013 59886 609754
132013 54937 607568
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5681
50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5681
50
FIGURE 471 Moving Average Chart Of Silver
INTERPRETATION
In the financial year 2010-2011the closing price was above the moving average line and it
represented the bullish market
And after 2010-2011 there was a frequent change in both the closing and moving average lineIn
this case the investor cannot able to predict about the futureSo investor can be advised to sell
the commodity
0
10000
20000
30000
40000
50000
60000
70000
80000
C983148983151983155983145983150983143 983152983154983145983139983141
983117983151983158983145983150983143 983137983158983141983154983137983143983141
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5781
51
TABLE 48 ROC OF SILVER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 1223761
1122010 1310945
112011 1468285
122011 1564349
132011 1549134
142011 1702442
252011 1733511
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5881
52
162011 1863226
172011 1360529
182011 1127011
192011 137693
1102011 1243317
1112011 9541827
1122011 837651
212012 1000034
122012 1021689
132012 9698111
242012 9423873
152012 1114101
162012
1011069
272012 9536203
182012 1003526
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 5981
53
192012 9271751
1102012 9888433
1112012 103607
1122012 1019521
112013 1135262
122013 1082316
132013 1090343
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
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73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6081
54
FIGURE 481 ROC Chart Of Silver
INTERPRETATION
The chart shows that ROC of Silver is going above 150 line on 252011 and in this period the
customer could hold the share After that it started going downward and it touched the 80 point
mark on 1122011So the investor can better sell the commodity
0
50
100
150
200
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6181
55
TABLE 49 RSI OF SILVER
YEAR RSI
2010-2011 90741
2011-2012 56014
2012-2013 4083
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6281
56
FIGURE 491 RSI Chart Of Silver
INTERPRETATION
In this chart the RSI of silver touched 90 point on 2010-2011 and in this period the customer
could sell the commodityBut in 2011-2012 the RSI line come down below 60 pointso the
investor could hold the commodityIn the year 2012-2013 the RSI come down below 50 pointSo
the investor can better buy the commodity
0
10
20
30
40
50
60
70
80
90
100
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6381
57
TABLE 410 MOVING AVERAGE OF COPPER
Date Closing Price (Rs) Moving Average
142010 35135
152010 327
162010 31930
172010 30165
182010 33835
192010 34890 32753
1102010 36215 32704
1112010 36910 33407
1122010 38805 34403
112011 43950 36131
122011 45190 38154
132011 45425 40214
142011 42585 42056
252011 417 43191
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6481
58
162011 40860 4377
172011 425 43152
182011 43135 42614
192011 42255 42156
1102011 34680 4209
1112011 38495 40686
1122011 40990 40213
212012 40780 39911
122012 41870 3944
132012 43080 39363
242012 44745 41043
152012 4518 42293
162012 41285 43131
272012 4267 43232
182012 42265 43392
192012 4272 43229
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6581
59
1102012 44005 42824
1112012 4233 42589
1122012 44085 42798
112013 45015 43081
122013 4442 43631
132013 43110 43971
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6681
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6781
61
TABLE 411 ROC OF COPPER
Date ROC
142010
152010
162010
172010
182010
192010
1102010
1112010 103073858
1122010 1128746177
112011 1215314751
122011 1456986574
132011 1335599232
142011 1301948983
252011 1175893967
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6881
62
162011 1129775129
172011 1052957093
182011 9670079636
192011 9545253375
1102011 9302146395
1112011 8143712575
1122011 9231414868
212012 1003181596
122012 9595294118
132012 970673467
242012 1019524317
152012 1290224913
162012 1173658917
272012 1007196877
182012 1046346248
192012 1009433962
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 6981
63
1102012 991643454
1112012 9834618393
1122012 9369189907
112013 1067821243
122013 1054956644
132013 1050987815
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7081
64
FIGURE 4111 ROC Chart Of Copper
INTERPRETATION
On 122011 the ROC line touched 140 mark which indicates that the investor can hold the
commodityAnd after that it started to decline On 1112011 the ROC line touched the 80 point
mark After that one time only it crossed the 120 mark So the investor can sell the commodity
0
20
40
60
80
100
120140
160
983122983119983107
983122983119C
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7181
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7281
66
FIGURE 4121 RSI Chart Of Copper
INTERPRETATION
In the financial year 2010-2011 the RSI line is above 70 point markSo the investor can sell the
commodity But in 2011-2012 and 2012-2013 the RSI line goes below the 50 point Which
indicates that the investor could think of selling the commodity
0
10
20
30
40
50
60
70
80
20109830852011 20119830852012 20129830852013
983122983123983113
983122983123I
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7381
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7481
68
SEVERAL REASONS FOR VARIATION OF THE PRICE OF COMMODITIES
GOLD
MCX gold futures turned out to be a strong safe haven for investment under the conditions of
lingering global economic concerns that entailed the financial turmoil in the Euro-zone and the
relatively high oil prices This helped MCX gold futures reach 28518 per 10 grams up by more
than 37 per cent on a yearly basis at the close of FY 2011-12
Gold price rallied more than +28 in 2010 marking the strongest rise since 1979 when price
more than doubled There are two main reasons driving the metal higher Sovereign crisis in the
European periphery and Quantitavive Easing by the Fed These two factors will continue to
support gold next year In 2010 gold made a record high of $1266 as Greece was facing
insolvency and the euro was threatened to be disintegrated
Quantitative Easing is an unconventional monetary policy used by the central bank to stimulate
the national economy when standard monetary policy has become ineffective Quantitative
Easing can be used to help ensure that inflation does not fall below target
During June 2010
bull India gold futures are likely to revisit the 19000-Rupee mark as the overseas trend is
seen as bullish with global investors seeking the safe haven metal due to uncertainty in
the global economy
bull India the worlds top gold buyer saw a sharp drop in June imports signalling recent
record high prices which indicates dissuading fundamental demand even as the worlds
largest exchange-traded fund reports record holdings
During February 2011
bull While presenting the annual budget in the Parliament Indias Finance Minister Pranab
Mukherjee proposed 1 central excise duty to be imposed on jewellery and articles of
Gold Silver and precious metals sold under a brand name
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7581
69
bull Indias bullion industry traders have cried foul over a 1 excise duty that the government
announced on gold silver and other precious metals in the annual budget presented in the
Parliament
bull Indian bullion industry leaders criticised the hike in the central excise duty on jewellery
articles of gold silver and other precious metals
During March 2011
bull The recent rebound in the US stock market from the March lows is a negative factor for
the precious metals markets as it shows that investor risk appetite has increased which
does pull away demand for the safe-have precious metals markets The recent downtrend
of price in US
During September 2011
bull Gold ticked up having gained from the previous session on German approval of a
stronger bailout fund to counter the euro zone debt crisis but the metal was heading for
its worst monthly decline in three years
During March 2013
bull The metal fell by 61 percent to $157327 an ounce in London this year after 12 straight
annual gains the best run in at least nine decades
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7681
70
SILVER
bull Silver has been one of the best-performing commodities in 2010 with prices rising by
83 compared to golds 28 As a result the goldsilver price ratio has fallen steadily
this year hitting a four-year low of 45 Silver rose above $30oz for the first time in 30
years as concerns over falling currencies increased investment demand for safe haven
assets
bull Silver posted an average price of $2019 in 2010 a level only surpassed in 1980 and a
marked increase over the $1467 average price in 2009
bull World investment rose by an impressive 40 in 2010 to 2793 million troy ounces
(Moz) resulting in a net flow into silver of $56 billion almost doubling 2009rsquos figure
bull In 2011 - Silver posted an annual average price of $3512 in 2011 more than double the
$1467 average price for 2009
bull Global investment in silver bars coins amp medals produced yet another historic high of
2822 million ounces ndash the equivalent of $10 billion itself is a record
bull 2012 - United States Mint Authorized Purchasers (APrsquos) ordered 3197000 Bullion
American Silver Eagle Coins on January 3rd the first day they went on sale That
opening day total catapulted January Bullion Eagle sales was higher than half of the
monthly totals in 2011
bull A large portion of silver demand (80) comes from fabrication which is expected to
rise about 3 to 5 in 2012 to roughly 900 million ounce
bull Current monetary policy will increase investors appetite for silver and triggering a
subsequent price rise
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7781
71
CRUDE OIL
bull There are several reasons why todayrsquos blog should be of great interest Last year the
petroleum-related trade deficit totaled $265 billion and accounted for 42 percent of our
total deficit in goods To put this in more personal terms $265 billion averages to about
$850 for every woman man and child in the US In 2008 when oil prices hit their all-
time high the petroleum-related deficit totaled $386 billion (over $1260 for each
person) That is a lot of money flowing out of the country for a commodity with a
volatile price over which we have little control
As per the performance of crude oil traded in december 2010
bull Crude traded near a two-year high price in New York on speculation that cold weather in
the US and Europe will boost demand in industrialized nations
bull One of the more important factors that has driven changes in our imports and trade deficit
over the past several decades is the price of oil Given recent events in North Africa and
the recent jumps in oil prices today we look more closely at the role of oil prices and the
trade deficit
Crude oil production during the period April-March 2012 (provisional) was 3819 million
metric tonne (MMT) as compared with 3771 MMT during the corresponding period
last year
bull Crude oil price rose by nearly 138 from January to December in 2010despite itrsquos not
as near as the yearly price hike in 2009 of over 78
bull When analysing the prospects of crude oil price in 2011there are several aspects worth
considering
worlds demand growth
OPECwhich is responsible for about 40 percent of the world crude oil
supplyannounced in a recent opec meetingit will sustain its current quota of
24845 million which set back in 2008
Europersquos recovery
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7881
72
COPPER
bull MCX Copper prices have spiked up sharply in the last five months since July 2010 and
which has given a neckline breakout at Rs 38805 in Nov 2010 on the closing basis The
Inverted Head and Shoulder formation which has been formed from May 2006 to Oct
2010
bull In 2011 worldrsquos copper mine production continued to underperform with respect to
capacity and remained at the 2010 level of 16005 million metric tonnes (MMT)
bull In 2011 the global refined copper production was 19630 MMT up from 18998 MMT in
2010 The global refined copper consumption was 19988 MMT compared with 19375
MMT in the previous year
bull Electric and electronic products industry has become Indias largest copper consuming
sector accounting for 36 of the total Indian copper consumption Telecom is still
Indias second largest copper consuming sector accounting for 20 of the total Indian
copper consumption
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 7981
73
CHAPTER VI
SUGGESTIONS
1 By making an analysis of RSI of each commodity for the past 3 financial year we can
say GOLD is the best commodity to invest But in the end of the month of march
2013the gold price declined due to certain reasons
There are some supportive issues for the decline of gold price in the trading session one
of it is the rise of the US dollar VS the Euro after rumours about the Euro bank so we
watch a rise in the US dollar and the investors escape to it and they work on selling gold
which lead to a decline in Gold price So the investor can make investment only after
undestanding the factors which adversly affect the gold
5 Sterlite Industries Hindalco and Hindustan Copper are three major producers of Copper
in India From the status of a net importer India is emerging as a net exporter of Copper
on account of a rise in the production of Copper So the investor can confidently invest in
Copper
6 We can confidentially predict a complete sell out of the gold because of the soverigncrisisSo the investor may get a better return at that time
7 Demand for silver in technology and industries is only going to increase and this may
cause an increase in priceThere is no substitute for silver in almost all products that it is
used inSo the investor will have a better choice for a long term investment
8 For 2013 it may continue to see robust crude oil prices with the trading near triple digits
Domestic producers may continue to increase output and some firms would generate
tremendous returns from some of these prospectsSo the investor can get better return by
making investment in crude oil
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8081
74
CONCLUSION
The results suggest that the performance of Indian commodity market is not so efficient in last
few years Other than Gold all other concerned commodities showed a negative trend and return
fluctuates throughout the period of study Every commodity spot price move along with future
priceAt the end of financial year 2013 the price of all commodities started to reduceTo
concludeGold could be suggested as the best investment option
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin
8132019 A Study on Performance of Indian Commodity Market for Top Four Commodities Traded in Mcxwith Special Referehellip
httpslidepdfcomreaderfulla-study-on-performance-of-indian-commodity-market-for-top-four-commodities 8181
75
BIBLIOGRAPHY
Books
bull Business statistics published by PALGRAVE MACMILLAN SONIA TAYLOR
bull Financial management published by Tata McGraw Hill 1998 Khan amp Jain
Articles
bull BhattacharyaH (2007) Commodity Derivative Market in India Economic andpolitical
weekly March issue
bull Kaminsky Graciela (1989) Efficiency in Commodity Futures Markets
bull Kabra K N (2007) ldquoCommodity Futures in Indiardquo Economic Political Weekly March
Websites
bull wwwfmcgovin
bull wwwncdexindiacom
bull wwwwikipediacom
bull wwwmcxindiacom
bull wwwcommodityindiacom
bull wwwinvestopediacom
bull wwwsharekhancom
bull wwwftkmccom
bull wwwfmcgovin