Kingston Project

8/17/2019 Kingston Project

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TABLE OF CONTENTS

Sl. No CHAPTER TITLE

PAGE

No.

1. Abstract I

2. Acknowledgement II

3. List of Tables IV

4. List of Figures V

5. I INTRODUCTION 1

1.1 tatement of t!e "roblem 2

1.2 #b$ecti%es of t!e stud& 2

1.3 co"e of t!e stud& 2

1.4 'esearc! (et!odolog& 3

1.5 Limitations of stud& 3

1.) *!a"ter sc!eme 4

+. II INDUSTRY PROFILE 5

+. III COMPANY PROFILE 11

,. IVDATA ANALYSIS AND

INTERPRETATIONS32

-. V FINDINGS OF THE STUDY ++

1. VISUGGESTIONS AND

RECOMMENDATION+,

11. BIBILOGRAPHY ,2

PROJECT REPORT


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A COMPARATIVE STUDY OF THE COMMODITY MARKET (GOLD)AND

EQUITY MARKET(NIFTY) WITH REFERENCE TO INDIABULLS

SECURITIES LTD.,

INTRODUCTION

Definition of a "Commodity"

An& "roduct t!at can be used for commerce or an article of commerce

w!ic! is traded on an aut!ori/ed commodit& e0c!ange is known as commodit&. T!e

article s!ould be mo%able of %alue somet!ing w!ic! is boug!t or sold and w!ic! is

"roduced or used as t!e sub$ect or barter or sale. In s!ort commodit& includes all kinds of goods. Forward *ontracts 'egulation Act F*'A 1-52 defines goods as e%er&

kind of mo%able "ro"ert& ot!er t!an actionable claims mone& and securities.

In current situation all goods and "roducts of agricultural including

"lantation mineral and fossil origin are allowed for commodit& trading recogni/ed under

t!e F*'A. T!e national commodit& e0c!anges recogni/ed b& t!e *entral 6o%ernment

"ermits commodities w!ic! include "recious gold and sil%er and non7ferrous metals8

cereals and "ulses8 ginned and un7ginned cotton8 oilseeds oils and oilcakes8 raw $ute and

$ute goods8 and gur8 "otatoes and onions8 coffee and tea8 rubber and s"ices. 9tc.

tock markets e0tremel& risk& and %olatile and !ence t!e risk consideration is an

im"ortant concern for in%estors. To reduce t!is risk t!e conce"t of deri%ati%es comes into

t!e "icture. :eri%ati%es trading commenced in India in ;une 2 9


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ingle stock futures were launc!ed on =o%ember - 21. T!e inde0 futures and o"tions

contract on =9 are based on ?@ *= at "resent (utual Funds are "ermitted to

"artici"ate in t!e deri%ati%es market for t!e "ur"ose of !edging minimi/ing risk and re7

balancing t!eir "ortfolio.

Ob!"#$%!& o' #! *+

To stud& t!e relations!i" between *ommodit& and 9Buit& market

To anal&/e of usage of gold

To com"are t!e risk factor in bot! t!e markets

To identif& t!e function of gold market

To make suggestions

S"o-! o' #! *+C

T!e stud& mainl& focuses on t!e com"arison between t!e gold "rice and t!e nift&

inde0 . It will !el" us to know w!ic! is more risk& and w!ic! would &ield us more

returns. T!is would mainl& suggest w!ic! is t!e best means of in%estment for t!e

in%estors.

R!&!/" M!#o*olo0+C

(et!odolog& is a "lan of action for researc! "ro$ects and e0"lains

in details !ow data are collected anal&/ed and "resented so t!at t!e& will "ro%ide

meaningful information.

'esearc! met!odolog& is a scientific wa& to stud& researc!

"roblem and researc! design. It is for o%erall o"eration "attern t!at sti"ulates w!at

information to be collected from w!ic! source and b& w!ic! "rocedures.

L$1$##$o2 o' #! S#*+

1 #nl& "ast fi%e mont!s data !a%e been taken for t!e stud&.

2 It is onl& a com"arati%e stud& t!e future !a""ening ma& %ar&.


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3 :ata collected is onl& a secondar& data .

Co1-/$&o2 o' Co11o*$#$!& 3 E4$#$!&

*ommodit& 9Buit&

Intrinsic Value =o Intrinsic %alue

(acro 9conomic 'isk *om"an& "erformance

Less Volatile Volatile

'ate of return is !ig! 'ate of return is medium

:omain knowledge of

commodit&

is useful =ot %er& muc!1D risk of deli%er& at t!e end

of

contract =o risk of deli%er&

:eli%er& in :emat > @!&sical :eli%er& in :emat

@rice Buote %ar& based on

commodit& @rice Buoted for one s!are

Commodity Exchanges

A brief descri"tion of commodit& e0c!anges are t!ose w!ic! trade in "articular

commodities neglecting t!e trade of securities stock inde0 futures and o"tions etc.

In t!e middle of 1-t! centur& in t!e Enited tates businessmen began organi/ing market

forums to make t!e bu&ing and selling of commodities easier. T!ese central market"laces

"ro%ided a "lace for bu&ers and sellers to meet set Bualit& and Buantit& standards and

establis! rules of business.

Agricultural commodities were mostl& traded but as long as t!ere are bu&ers and sellers

an& commodit& can be traded. In 1,+2 a grou" of (an!attan dair& merc!ants got

toget!er to bring c!aotic condition in =ew ork market to a s&stem in terms of storage

"ricing and transfer of agricultural "roducts.


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In 1-33 during t!e 6reat :e"ression t!e *ommodit& 90c!ange Inc. was establis!ed in

=ew ork t!roug! t!e merger of four small e0c!anges G t!e =ational (etal 90c!ange

t!e 'ubber 90c!ange of =ew ork t!e =ational 'aw ilk 90c!ange and t!e =ew ork

Hide 90c!ange.

T!e ma$or commodit& markets are in t!e Enited ingdom and in t!e EA. In India t!ere

are 25 recognised future e0c!anges of w!ic! t!ere are t!ree national le%el multi7

commodit& e0c!anges. After a ga" of almost t!ree decades 6o%ernment of India !as

allowed forward transactions in commodities t!roug! #nline *ommodit& 90c!anges a

modification of traditional business known as Ad!at and Va&da V&a"ar to facilitate better

risk co%erage and deli%er& of commodities. T!e t!ree e0c!anges areC

National Commodity & Derivatives Exchange Limited NCDE!

#$lti Commodity Exchange of %ndia Limited #C!

National #$ltiCommodity Exchange of %ndia Limited N#CE%L

All t!e e0c!anges !a%e been set u" under o%erall control of Forward (arket *ommission

F(* of 6o%ernment of India.

N#$o2l Co11o*$#+ 3 D!/$%#$%!& E5"20! L$1$#!* (NCDE6)

=ational *ommodit& ? :eri%ati%es 90c!ange Limited =*:9 located in (umbai is a

"ublic limited com"an& incor"orated on A"ril 23 23 under t!e *om"anies Act 1-5)

and !ad commenced its o"erations on :ecember 15 23.T!is is t!e onl& commodit&

e0c!ange in t!e countr& "romoted b& national le%el institutions. It is "romoted b& I*I*I


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Ml#$ Co11o*$#+ E5"20! o' I2*$ L$1$#!* (MC6)

HeadBuartered in (umbai (ulti *ommodit& 90c!ange of India Limited (* is an

inde"endent and de7mutualised e0c!ange wit! a "ermanent recognition from 6o%ernment

of India. e& s!are!olders of (* are Financial Tec!nologies India Ltd. tate


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Commodities exchanges across the 'orld

A1!/$"&

90c!ange Abbre%iation Location @roduct T&"es


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90c!ange ;a"an 'ubber

:alian *ommodit& 90c!ange :*9:alian

*!inaAgricultural @lastics

:ubai (ercantile 90c!ange :(9 :ubai 9nerg&

:ubai 6old ? *ommodities

90c!ange:6* :ubai @recious (etals

ansai *ommodities

90c!angeA=9

#saka

;a"anAgricultural

(ulti *ommodit& 90c!ange (* India9nerg& @recious (etals (etals

Agricultural

=ational (ulti7*ommodit&

90c!ange of India Ltd

=(*9 India@recious (etals (etals

Agricultural =ational *ommodit&

90c!ange Limited =*9L @akistan @recious (etals Agriculture

90c!ange Ltd.


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London (etal 90c!ange L(9 London E Industrial (etals

@lastics

'isk (anagement 90c!ange '( Hanno%er :eutsc!land Agricultural

O"!2$

90c!ange Abbre%iation Location @roduct T&"es

Australian ecurities 90c!ange A &dne& Australia Agricultural

#(LT% CO##OD%T) E!C*+N,E #C!-

(* is an inde"endent commodit& e0c!ange based in India. It was establis!ed

in 23 and is based in (umbai. T!e turno%er of t!e e0c!ange for t!e "eriod A"r7:ec

2, was I=' 32 Trillion. (* offers futures trading in Agricultural *ommodities


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w!ic! "ro%ides bulk storage and !andling of agricultural "roducts. It is now regulated b&

forward market commission.

• (* is IndiaMs =o. 1 commodit& e0c!ange wit! ,4D (arket s!are in 2,N.,4

trillion

• T!e e0c!angeMs com"etitor is =ational *ommodit& ? :eri%ati%es 90c!ange Ltd

• 6loball& (* ranks no. 1 in sil%er no. 2 in natural gas no. 3 in crude oil and

gold in futures trading

• T!e crude %olume touc!ed 23.4- (illion barrels on ;anuar& 3 2-

• T!e !ig!est traded item is gold wit! an a%erage mont!l& turno%er of 's 1.42

Trillion N2-


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• KorldJs second largest sil%er e0c!ange after *#(9

• KorldJs t!ird largest gold e0c!ange after *#(9 ? T#*#(

Co11o*$#+ M/8!# S!01!2#

T! -/o*"#& #/*!* # MC6

(9TAL


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*otton L ta"le *otton ( ta"le *otton

ta"le *otton arn a"as


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,OLD T*RO(,* T*E +,E.

T!e !istor& of gold begins in remote antiBuit&.


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in India 9uro"e and t!e Enited tates of America. 6old $ewelr& is uni%ersall& "o"ular

lo%ed for its lustrous &ellow color and untarnis!ing c!aracter. In man& Asian countries

suc! as India T!ailand and *!ina gold is im"ortant to religious ceremonies and social

occasions suc! as t!e *!inese =ew ear and Hindu marriages in India.

Wo/l* Gol* M/8!#&

• London as t!e great clearing !ouse

• =ew ork as t!e !ome of futures trading

• Puric! as a "!&sical turntable

• Istanbul :ubai inga"ore and Hong ong as doorwa&s to im"ortant consuming

regions.

• Tok&o w!ere T#*#( sets t!e mood of ;a"an

• (umbai under IndiaMs liberali/ed gold regime

• 24 !ours round t!e clock market

• Hong ong 6old (arket

• Puric! 6old (arket

•London 6old (arket

• =ew ork (arket

%ndia in /orld ,old %nd$stry

(Ro2*!* F$0/!&) I2*$ (I2 To2&) Wo/l* (I2 To2&) 9 S/!

Total tocks 13 145 -

*entral


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Annual 90"orts )

#a0or gold 1rod$cing co$ntries

•

out! Africa

• Enited tates

• Australia

• *!ina

• *anada

• 'ussia

• Indonesia

• @eru

• E/bekistan

• @a"ua =ew 6uinea

• 6!ana

•


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;a"an Free Free

orea. =ort! 'estricted 'estricted

orea out! 'estricted Free

(ala&sia Free Free

(&anmar 'estricted Free

@!ili""ines 'estricted 'estricted

inga"ore Free Free

Taiwan 'estricted Free

T!ailand 'estricted Free

Vietnam 'estricted Free

Gol* "o2%!/&$o2

To *on%ert

Keig!t (ulti"l& b&

#unces tro& to grammes 31.135

6rammes to ounces tro& .3215+

#unces a%oirdu"ois to grammes 2,.34-5

6rammes to ounces a%oirdu"ois .352+4

#unces tro& to grains 4,

6rains to ounces tro& .2,33


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#unces tro& to ounces a%oirdu"ois 1.-+14

#unces a%oirdu"ois to ounces tro& .-1145,

ilograms to ounces a%oirdu"ois 35.2+4

ilograms to ounces tro& 32.15+

#unces tro& to tolas 2.)))+

Tolas to ounces tro& .3+5

ilograms to tolas ,5.+55

#unces tro& to taels .,3

Taels to ounces tro& 1.233+

ilograms to taels 2).+1+2

For e0am"le C 1 ounces tro& R 311.35 grammes

T! -/$#+ o' 0ol* /#$"l!& $& 0!2!/ll+ *!&"/$b!* $2 #/!! :+&

@ercent D @arts of gold "er

1

Fineness@arts of gold "er

1

arats@arts of gold "er

24

1D --- Fine 24 arats

-1.+D -1+ Fine 22 arats

+5.D +5 Fine 1, arats

5,.5D 5,3 Fine 14 arats

41.)D 41) Fine 1 arats

Gol* "o#!* 1!&/!&

(an& gold7coated articles are also used as substitutes for solid karat gold. T!e t!ickness

of t!e coatings are often e0"ressed in milliont!s of an inc! or microinc!es and t!e table


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below "ro%ides a wa& to translate between t!ese and ot!er measurement units.

1 milliont! inc! micro inc! R .254 micron

1 t!ousant! inc! mil R 25.4 microns

1 milliont! meter micron R 3-.3+ micro inc!es

1 millimeter R 3-.3+ mils

F$2! 0ol* "o2#!2#

T!e minimum fineness is --5 "arts "er 1 fine gold and gold said to be 1 fine is

marked down to ---.- fine. T!e following fine gold contents of ot!er bar weig!ts are

acce"ted b& t!e London


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;!:!ll!/+ "o2&1-#$o2 ($2 To22!&)

To- No. Co2#/$!&


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15 "ain )1 53 51

1) (e0ico 32 42 51

1+ T!ailand 21 42 51

1, 'ussia 44 4 4+

1- Iran 42 41 45

2 ;a"an 45 43 43

%ndian ,old #ar3et

6old is %alued in India as a sa%ings and in%estment %e!icle and is t!e second "referred

in%estment after bank de"osits. India is t!e worldMs largest consumer of gold in $eweller&

as in%estment. In ;ul& 1--+ t!e '


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in%estment acti%it&. T&"icall& a !edger mig!t in%est in a securit& t!at !e belie%es is

under7"riced relati%e to its Qfair %alueQ.

S-!"l#o/& If a futures market is restricted to !edgers alone it is Buite concei%able t!at

one or ot!er grou" of !edgers would be unable to !edge wit!out distorting t!e "rice

because of t!e absence of counter "arties to t!e transactions. It is !ere t!at t!e role of t!e

s"eculator becomes a""arent. It is t!e s"eculators w!o take u" t!e slack in t!e market

and "ro%ide liBuidit&. T!e s"eculators !a%e no s"ecific interest in t!e commodit& rat!er

t!e& are risk seekers w!ose interest stems from t!e "rofit w!ic! t!e& e0"ect to make from

assuming t!e "rice risk.

Let us see t!e main use of s"eculation we can sa& &es as t!ere can be no effecti%e

!edging since t!e %olume of demand for long and s!ort !edging will not be eBual e0ce"t

b& occasional coincidence. It must be noted t!at t!e "ractice of s"eculation b&

facilitating !edging reduces t!e costs of marketing. econdl& s"eculati%e acti%it&

increases t!e liBuidit& of markets t!ereb& enabling !edgers to transact large %olumes of

business on t!e market Buickl& easil& and wit!out undul& affecting t!e market "rice.

A/b$#/0!/& Arbitrage can be described as a transaction in%ol%es bu&ing and selling a

good or asset in two different markets in order to ac!ie%e a risk less "rofit t!roug! t!e

difference in "rice between t!em. In a broadest sense we can sa& an arbitrageur is one

w!o trades onl& to reali/e "rofits from discre"ancies in t!e market. #f course in "ractice

t!e arbitrageur is not a se"arate "erson8 eit!er a !edger or a s"eculator can indulge in

arbitrage w!en t!e o""ortunit& arises. Arbitrage "la&s a big role in ensuring t!at "rices in

futures markets do not di%erge from t!e le%el dictated b& su""l& and demand and in

ensuring s"eed& correction of an& "ricing anomalies.


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4%ND%N,. +ND %NTERPRET+T%ON-

So/"! kannafuture.com


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So/"! nseindia.com



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So/"! nseindia.com



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So/"! nseindia.com



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So/"! nseindia.com



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So/"! nseindia.com

%nter1retation-

• T!e abo%e s!own gra"!s are t!e gold "rice mo%ements and t!e nift& "oints

fluctuations for "ast fi%e mont!s i.e ;an 2- G (a& 2- .

• T!is clearl& s!ows us t!at w!en t!e gold "rices are !ig! t!e nift& "oints goes

down t!erefore it clearl& s!ows t!at t!e& !a%e an in%erse relations!i".

• It also s!ows t!at commodit& market !a%e a !ig!er risk t!an t!e eBuit& market

because it in%ol%es !uge cas! to be in%ested and more o%er it deals wit! t!e

"!&sical deli%er& of t!e goods w!ic! ma& lead to mis!a""enings.

• T!e =ift& or t!e eBuit& market would &ield us wit! !ig!er returns wit! less

in%estment w!en com"ared to gold.


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Concl$sion-

It is a general assum"tion t!at bot! t!e commodit& market and t!e eBuit&

market !a%e an in%erse relations!i" but w!en &ou keenl& obser%e t!e gra"! of t!e

mont! of (a& 2- bot! t!e commodit& market and t!e eBuit& market !a%e direct

relations!i". T!erefore not!ing can be "redicted in t!e market .T!e market fluctuations

ma& be due to world market functioning also . imilarl& t!ere ma& be sudden c!anges

due t!e go%ernment interference. T!erefore tec!nical anal&sis and t!e "rediction of t!e

market are $ust a tool for in%estment. It ma& not be true in all cases.

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