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Growth of Indiabulls in Commodity Market

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					                           Growth of Indiabulls in Commodity Market

The following article is a summary extract from the dissertation projects of the MBA and BBA
students of Skyline College. Skyline, situated in Delhi and Gurgaon (NCR) is a premier institute
providing management education specialising in MBA and BBA degrees and specialist courses
for travel and tourism as well as mass communication. For further information on the article
content or on the institute please CLICK HERE to visit the official college website.

This dissertation was completed by Shahzad Husain (2007 – 2009) on the topic Growth of
Indiabulls in Commodity Market

                                            Summary

Commodity Market has been functioning in India from a period of pre-independence only but it
was not organized. So the benefits were not reaching to small traders and consumers. They
were exploited by big traders.
So, in the year 2002-03 GOI felt the need of a well organized commodity market in India too on
the lines of commodity exchanges world over i.e. New York, Chicago, and Hong Kong etc.
Finally in December 2003 a well organized commodity market in India too was established.
Today there are 21 regional and 3 national commodity exchanges which were established as
price setter for various commodities.
After three years of their inception, 3 national multi-commodity exchanges account for 94 pc of
total trade volume in India. India’s commodity futures markets witnessed a whopping 373 per
cent increase in trade in value terms during the financial year 2005-06.
The total value of trade increased to Rs 21,34,000 crore, according to the Forward Markets
Commission (FMC). In the previous fiscal, the value of trade stood at Rs 5,72,000 crore.
It is predicted that by the end of this year Indian Commodity Market will surpass Chicago
Mercantile Exchange in trade volume.
Keeping the huge growth in the commodity market in this short span of time in mind I tried to
study the growth and future prospect of Indiabulls in the commodity market.
I covered the Delhi region only for our research study, in which I have tried to know the present
condition of commodity trading in this area and what is the future prospect.
For the above purpose I went to 30 leading broking firms dealing in Commodity Market which
helped me to understand the present condition of commodity trading not only in Delhi but in
India too.
I also talked to 100 people from different fields to know the growth and future prospect of
commodity trading in this region. This helped me to know about the perception of common
people about the commodity market. Lack of knowledge about the market among the masses
was the biggest hurdle.
In the first phase of the study I visited the broking firms to know about their structure and the
facilities they provide to their customers.
In the second and final phase I met the prospective clients who are either investing or can
invest in the commodity market if they come to know about the prospects in this market.

Objective of the Study:
In one year time commodity futures markets have average daily volumes of more than Rs.4,
000 crores at NCDEX and MCX each and have surpassed that of the Bombay Stock Exchange
(BSE) which have a volume of Rs.2, 500 crores. The total volume of commodity futures trading
in the country has reached Rs. 1, 90,000 crores ($44 billion) during the first quarter of the
current fiscal, showing a significant growth of 800 percent as per the statistics by FMC.
So the objective of my study was to find out the Growth Prospect Of Indiabulls In Commodity
Market. In my study I have tried to know the present condition of commodity market in Delhi
region by gathering information from various brokerage firms and investors and non-investors
My main objective of the study was to know the present scenario of commodity market and
what is the future growth prospect of Indiabulls as a major market player in the same.

Findings:
   1. It is found that 82% of the respondents were non-investor and only 18% were investing
       in Commodity market.
   2. 62% of the respondents were working with various firms i.e. ICICI, Meril Lynch etc.than
       15% were working with Indiabulls and Religare.8% were with Sharekhan.
 3. Those respondents who were investing in commodity market were relatively new as the
    40% of them were working for 0-6 months.27% were working for 6m-14yrs.20% were
    those who were working for 2-3yrs or more.
 4. 37% of the respondents were trading once a month followed by occasional investor
    which were 36%.daily traders were 27% of total respondents.
 5. On asking the purpose of trade, 72% of the respondents have said they trade for
    speculation      and other remaining respondents said they trade for hedging and
    speculation(14% each)
 6. 57% of the respondents were investing less than 3 lacs and 29% were those investing
    above 10 lacs.
 7. Majority of the respondents have said that (47%) their other mode of investment
    includes shares thereafter followed by mutual Funds (26%)
 8. To know the importance of speculation on Commodity trading            specifically asked
    the respondents whether they trade for speculation or not.80% have said they are trade
    for speculation.
 9. National broker was preferred over regional broker but 29% have said they do trade
    with both.
 10. To check the satisfaction level of the respondents, I have asked them to choose option
    based on Liker scale 50% have said they are satisfied only 36% have said that they are
    highly satisfied.
 11. In study it was observed that major problem faced by customer was slow trading
    process. Other major problems faced by them were of cash withdrawal, poor service
    and others.
 12. It was observed that 37% of the clients access information regarding commodity market
    through internet. Magazine, broker and newspaper were other source of information
    having 16% respondent each.
13. Non investors have also being asked about their modes of investment and 25% have said
    that they opt for Fixed Deposit; shares were second major investment (22%). A good
       number of respondents have said MFs as a good investment (21%). In others section
       property and stock in trade was cited as a good option for investment
 14. Question about reason for not investing in commodity market and it has also been found
       that lack of knowledge was a major hindrance in their investment.


 15. There was also an evaluation on respondents’ expectation from their Investment          i.e.
       what do they look for in their investment 44% have given priority for lesser risk followed
       by 37% looking for high return.
 16. In the questionnaire, I have tried to evaluate about non investors in commodity market,
       whether they trade in shares? In its response 43% have said that they trade in shares and
       57% were non investors.
 17. During the study I have tried to investigate whether they are planning to invest in
       commodity market 55% have said that they are willing to invest in commodity market
       which was a good sign and shows growth prospect in the same.

Recommendations:
Indiabulls should open there branches at these locations like Lawrence Road to tap the Mandi
traders and Mandi brokers.
Indiabulls should take care of this trading process and should make proper arrangement so
that his client can also take delivery of commodities.
In my study a major reason for non-investment in commodity market was lack of knowledge so
Indiabulls should conduct an awareness program so that new investors should come for
commodity trading.
A good research team is must to succeed in long run so it is recommended that Indiabulls
should create its own research team to analyze commodity market.
Indiabulls can also start its own journal on commodity market as well as share market as this
will be good for company in building trust among clients.
Many of the respondents (investors & non-investors) have said that apart from shares they also
invest in MFs. Indiabulls can endeavor in the same as a good number of people are investing in
MFs.
It also came to my knowledge that different investors have different risk taking capacity. Some
respondent have preferred high return and some have played safe and preferred lesser risk. So
the company must provide portfolio management service taking into care the risk taking
capacity of the customer.




Conclusions:
Commodity market is the next big thing in Indian economy. India's commodity futures markets
witnessed a whopping 373 per cent increase in trade in value terms during the financial year
2005-06. Within a short span of three years its value of trade has reached Rs 2134471 cr and
three national commodity exchange account for 94% of total value traded.
India has a great opportunity to attain global standing in commodity trading. Indian genius in
this area is globally recognized. The best and brightest Derivatives traders in New York, Chicago,
London, Hong Kong and other Places are typically Indians.
Limitations of the Study:
The research work “Future And Growth Prospect Of Indiabulls In Commodity Market” has
some limitations which should be kept in mind while relying on the findings.
The commodity market comprises of 21 regional and 3 national commodity exchanges. The
commodity market works through some national and several regional broking firms spread all
over India. It was not possible for me to cover the whole population* so I have covered only
Delhi region for my research purpose. I have conducted this research in two phases, in first
phase, I have covered thirty brokerage firms and in second phase, I have covered hundred
customers only.
My study has limited implication as the resources were limited and it covers only Delhi region.

				
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posted:3/2/2010
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