Commodity Trading Abstract

Commodity trading is characterized by high market volatility and risk. Globalization and advances in technology have significantly changed the way trading is done the factors differencing prices and the frequency with which prices change has increased exponentially timely access to information and analysis is the only way to succeed in commodity.

COMMODITY

Any product that can be used for commerce or an article of commerce which is traded on an authorized commodity exchange is known as commodity. The article should be movable of value, something which is bought or sold and which is produced or used as the subject or barter or sale. In short commodity includes all kinds of goods. Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines “goods” as “every kind of movable property other than actionable claims, money and securities”. In current situation, all goods and products of agricultural (including plantation), mineral and fossil origin are allowed for commodity trading recognized under the FCRA. The national commodity exchanges, recognized by the Central Government, permits commodities which include precious (gold and silver) and non-ferrous metals, cereals and pulses, ginned and un-ginned cotton, oilseeds, oils and oilcakes, raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea, rubber and spices. Etc.

WHAT IS A COMMODITY EXCHANGE?

A commodity exchange is an association or a company or any other body corporate organizing futures trading in commodities for which license has been granted by regulating authority. In India there are three national commodity exchanges these are: National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai, Multi Commodity Exchange of India Limited (MCX) Mumbai and National Multi-Commodity Exchange of India Limited (NMCEIL) Ahmadabad .There are other regional commodity exchanges situated in different parts of India.

NEED OF THE STUDY

The need of the study arises due to lack of knowledge about the commodity market because now-a-days, commodity trading has become an important investment avenue and most of the investors are still unaware about its advantages and shortcomings. Huge amount of investment is required for trading in commodity market. To know the impact of other markets on commodity market, it became necessary to understand the trading of commodity market. So commodity trading covers the meaning of commodity market, its trading, clearing and settlement, the various commodities being traded on NCDEX and MCX. It further includes the various market participators in commodity market and instruments available for trading like future contracts, forward contracts and options.

SCOPE OF THE STUDY

This project on ‘Investors Perception Regarding Commodity Trading’ has a wide scope and is indeed a great help in understanding the core concept of trading in various commodities. The scope of my study was confirmed to current time period. For the sake of study survey was conducted in Hyderabad. A limited sample was selected to fulfill the various objectives of the study. Scope was related to have a general view of the investors towards the commodity trading.

OBJECTIVES OF THE STUDY

Ø To know about the commodity in which the investors mostly trade.

Ø To know about the Commodity Exchanges preferred by investors.

Ø To know the purpose of investment in commodity market.

Ø To know the impact of commodity trading on commodity prices.

Ø To find out the problems regarding trading in commodity market.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. The research methodology includes the various methods and techniques for conducting a research. “Marketing Research is the systematic design, collection analysis and reporting of data and finding relevant solution to a specific marketing situation or problem.” D. Slesinger and M. Stephenson in the encyclopedia of social sciences define Research as “the manipulation of things, concept or symbols for the purpose of generalizing to extend, correct or verify knowledge, whether that knowledge aid n construction of theory and practice of an art.

Research is thus an original contribution to the existing stock of knowledge making for its advancement. The purpose of research is to discover the answers to the questions through the application of scientific procedures.

Defining the Research Problem and Objectives: It is said, “A problem well defined is half solved”. The first step in research methodology is to define the problem and deciding the research objective. The objective of the study is to know about the Investor perception regarding Commodity Trading

Research Design: Research Design is a blueprint or framework for conducting the research project. It specifies the details of the procedures necessary for obtaining the information needed to structure and solve research problem. The research design used in present study is descriptive research.

Sampling design: sampling can be defined as the section of some part of an aggregate or totality on the basis of which judgment or an inference about aggregate or totality is made. The steps involved in sampling design are as follows:

Universe: Universe refers to the total of the units in field of inquiry. Universe of the present study is all the investors who trading in Commodity market

Sampling unit: Sampling unit of the present study is Investors of Jalandhar, Hoshiarpur & Ludhiana city.

Sampling size: sampling size is the total no. of units which we covered in the study. In present study sample size is 100.

Sampling Technique: Sampling Technique used in the study is Convenient Sampling.

Convenient sampling: it is that type of sampling where the researcher selects the sample according to his or her convenience.

Data Collection and Analysis: Data can be collected in two ways

a) Primary data: Primary data are those, which are collected afresh and for the first time, and thus happen to be original in character. It is the backbone of any study.

b) Secondary data: Secondary data are those which have already been collected by someone else and which have already been passed through the statistical process. In this case one is not confronted with the problems that are usually associated with the collection of original data. Secondary data either be published data or unpublished data.

Source of data: source of the present research is both primary and secondary data. Primary data is obtained from respondents with the help of widely used and well-known method of survey, through a well-structured questionnaire. And the secondary data is collected from the internet.

Research instrument: Research instrument is that with the help of which the researcher collect the data from respondents. The questionnaire of the present research consists of close ended and Likert Scale.

Tools of Analysis: In present study pie charts, graphs and percentage use to analyze the collected data.

Limitations of the Study

Although the sincere efforts have been done to collect authentic and relevant information, the study may have the following limitations -:

Ø Hard Enough to Fetch Information: It was not an easy task to get information from investors who invest in commodity. The investors were not always open and forthcoming with their views, even agitated and not disclosing.

Ø Limited Scope: Scope of study is limited to Hyderabad only and because of limited time and money, the results of study may not be generalized for India as a whole.

Ø Results may be Inaccurate: This study is based on the assumption that perceptions are true and factual although at times that may not be the case.

Ø Existence of Biases: Though every care has been taken to eliminate such biases, but considering the human factor the possibility of small bias having come up cannot be ruled out altogether.

Ø Investor Behavior: investor behavior is dynamic in nature and thus over the time, finding of today may become invalid tomorrow.

Ø Small Sample Size: The sample size taken is small and may not be sufficient to predict the result with 100% accuracy and hence findings may not be generalized.

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