ABML Commodities Presentation
ABML Commodities Presentation
ABML Commodities Presentation
Year
2006 2007 2008 2009
% Growth
26.00 44.00 38.00
Commodity exchanges volumes have gone up from Rs.250 crores per day in 2004 to Rs.27250 crores as in 2009, 109 fold increase over past 6 years. (Currently, daily average volumes are Rs.38,000 crores as of October 2010). CAGR of 38% over past 3 years
Exchange (%)
35.00 17.00 20.00 12.50 4.50 89.00 11.00 100.00
Rs. In Crs
8355 4155 4880 3015 1105 21510 2500 24010
Why Commodities ?
Portfolio Diversification - Commodities dont move exactly the same way & at the same time as equities do, for example, if equity falls on one day, commodities may not necessarily fall that day as factors affecting both these markets are different. For example, buying Infosys & buying Copper both are completely unrelated. Commodities are less related with each other as fundamentals driving each commodity is different. Unlike stocks, which are affected by global & domestic overall sentiments. Global in Nature hence there is less risk for manipulation (explained later) Low Volatility over Equities (explained in later slide) Leverage Effect (explained in later slide)
(Allocating 10% - 15% of a securities portfolio to commodities, investor can vastly improve performance in hostile markets.)
Aditya Birla Money Limited
Copyright Aditya Birla Nuvo Limited 2008
21000 19500 18000 16500 15000 13500 12000 10500 9000 7500 6000 4500 3000 1500 0
10/23/2005 10/23/2006 10/23/2007 10/23/2008 10/23/2009 1/23/2006 4/23/2006 7/23/2006 1/23/2007 4/23/2007 7/23/2007 1/23/2008 4/23/2008 7/23/2008 1/23/2009 4/23/2009 7/23/2009 1/23/2010 4/23/2010 7/23/2010
gold prices touched its previous high of gold prices touched 14300 in of 08 their highOct14300 while 08 while Nifty in Oct Sensex fell to its to its 08 low fell08 low 7700 in Oct 7700 in Oct
Nifty
Gold
Gold 10000(Jan)14300(Oct) 100% investment in Sensex 80% in Sensex and 20% in Gold
The above table shows Sensex and gold prices during 2008. After the Sensex hit a high in Jan 08, it hit a low by the end of the year while gold rose. The above table clearly indicates that if an investors had invested 100% of his portfolio in equities he would have incurred a loss of 63% on his total investment during 2008. While 20% of portfolio diversified into gold would have reduced his losses by around 33%.
Aditya Birla Money Limited
Copyright Aditya Birla Nuvo Limited 2008
2.
3.
4. 5.
Gold Prices
20000
19000
18000
17000
16000
15000
Purchase of 200 MT of gold by the Reserve Bank of India led to sharp price rise in Nov.'09
14000
13000 1-Sep-09 16-Sep-09 1-Oct-09 16-Oct-09 31-Oct-09 15-Nov-09 30-Nov-09 15-Dec-09 30-Dec-09 14-Jan-10 29-Jan-10 13-Feb-10 28-Feb-10 15-Mar-10 30-Mar-10 14-Apr-10 29-Apr-10 14-May-10 29-May-10 13-Jun-10 28-Jun-10 13-Jul-10 28-Jul-10 12-Aug-10 27-Aug-10
Sensex
Gold
Silver
Cotton
Oilseeds
Leverage Effect
Commodities provides investors an option to trade in a contract by paying only low margin amounts. The effect is known as leverage effect. As mentioned below by paying Rs.75760, an investor can buy gold lot worth Rs.19 lacs. While the same amount will buy approximately 3 lot of Nifty worth Rs.9 lacs. (as of Sep 2010) Price of one lot of % of Money Reqd. Margin Money Prices Quoted Commodity Contractprovides (Rs) degree of exposure with lower amount. (Rs) required Hence commodity at MCX higher as Margin Gold Regular Gold Mini Copper Silver Silver M Crude 18,94,000/1kg 1,89,400/100 gm 3,50,000/MT 9,08,790/30kg 1,51,465/5kg 3,48,500/100 barrel 4% 4% 5% 5% 5% 5% 75760 7575 17500 45440 7575 17425 18940/10gm 18940/10gm 350/kg 30293/kg 30293/kg 3485/barrel
Metals
Gold Silver Steel Copper Zinc Nickel Lead & Aluminium
Edible Oils
Soy Oil Mustard Oil Crude Palm Oil
Energy
Crude Oil Brent crude Furnace oil Natural gas
Softs
Cotton Gur
Agri. Comm.
Pepper Guar Seed Soy Bean Jeera Mustard Chilli Etc..
Market Participants
Hedgers, Speculators, Investors, Arbitragers Producers Farmers , Manufacturer, Corporate Consumers Refiners, Food Processing Companies, Jewelers, Textile Mills, Exporters & Importers, Manufacturing Sector Institutions, Banks, Mutual Funds (These are currently not permitted in Indian Commodities Exchanges).
Trading Strategies
Pure Trading
Speculators in the futures market can use different strategies to take advantage of rising and declining prices. The most common are known as Going Long, Going Short
As an Investment
Investors can build and Diversify their Portfolio
Alternative Ideas
Calendar Spread trading
Spreads involve taking advantage of the price difference between two different contracts of the same commodity
Arbitrage Opportunities
Inter Exchange (NCDEX & MCX) Spot -to- Futures
Margins vary between 4% - 10% depending on the volatility Expiry dates are different for most commodities.
2. Dont risk more than 5% of corpus on any one trade 3. Never average losers 4. Trade with the TREND 5. Do not trade on HOPE. Hope is good for in life but not in markets 6. Taking small profits and letting losses run is based on fear and hope. This every trader will have to find a way to deal with 7. Do not increase your commitment with success. Overconfidence can be very dangerous in markets
Untapped Potential
India is the 2nd fastest growing economy in the world after China. We are amongst the top producers in Sugar/Wheat and other agri commodities, and the largest consumer of gold. We anticipate commodity derivatives business in India to grow at the rate of +30% per annum over the next 3 years A Rs.75,000 crore per day market by 2013.
Provide intraday and positional trading calls with a strike rate of 65%-70% on major commodities such as gold / silver / copper / crude / soybean / guarseed / chana, to name a few.
Publish indepth special monthly reports on Gold / Silver aimed at educating the investors on global happenings, to help them take advantage of price moves.
32 21
11 66
Trade Type
70460
Initiation Price
Target
SL
Result
Realised P/L
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
30-Aug-10 30-Aug-10 31-Aug-10 31-Aug-10 01-Sep-10 01-Sep-10 01-Sep-10 02-Sep-10 02-Sep-10 03-Sep-10 03-Sep-10 06-Sep-10 07-Sep-10 08-Sep-10 08-Sep-10 08-Sep-10 08-Sep-10 09-Sep-10 09-Sep-10 13-Sep-10 14-Sep-10 14-Sep-10 15-Sep-10 16-Sep-10 20-Sep-10 21-Sep-10 01-Oct-10 04-Oct-10 04-Oct-10 05-Oct-10 06-Oct-10 07-Oct-10
Nickel Gold Silver Copper Gold Chana Crude Oil Silver Mentha Oil Zinc Soyabeen Chana Copper Gold Pepper Nickel Copper Lead Silver Crude Oil Nickel Crude Oil Crude Oil Nickel Silver Silver Silver Aluminium Crude Copper Copper Nickel
MCX MCX MCX MCX MCX NCDEX MCX MCX MCX MCX NCDEX NCDEX MCX MCX NCDEX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX MCX
September October September November October September September September September September September September November October September September November September December September September September September September September September December October October November November October
Buy Buy Buy Buy Buy Sell Sell Buy Buy Buy Sell Sell Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy
Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Positional Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday Intraday
1006 18885 30320 350.15 19110-19115 2235 3420 30780 784 100.25 2038 2206-2210 358.2 19175 20780 1033 356.6 101.15-101.20 31425-31440 3584-3587 1063-1064 3572-3575 3545-3550 1068-1070 32305-32320 32000-32012 33085-33 104.35-104.40 3632-3640 361.45-361.55 368.40-368.50 1103-1104
1016 19050 30590 356 19180 2180 3380 31100 791 101.9 2010 2164 361.3 19224 21240 1044 362 103.4 31225 3609 1086 3595 3592 1082 32630 32230 33400 105.5 3690 365 372 1135
1001 18815 30110 347.5 19073 2265 3437 30540 780 99.25 2055 2231 356.25 19152 20535 1029 352 99.6 31750 3572 1052 3560 3517 1056 32085 31880 32880 103.4 3597 360.35 365.8 1090
Booked profit at 1014 Target Achieved Target Achieved Target Achieved Profits booked at 19150 Booked profit at 2207 SL Triggered Target Achieved SL Triggered Booked profit at 101.25 SL Triggered Target Achieved SL Triggered SL Triggered Booked profit at 21100 Target Achieved Booked Profit at 360 Booked Profit at 102 SL Triggered Target Achieved Booked profit at 1080 SL Triggered SL Triggered Target Achieved SL Triggered Booked profit at 32150 Profits Booked at 33225 Profits booked at 104.80 Profits Booked at 3675 Target Achieved Sl Triggered Sl Triggered
2500 16500 8100 5850 4000 2800 -1700 9600 -1440 5000 -1700 4400 -2000 -2300 3200 2750 3400 4000 -6000 3400 4000 -1300 -3000 3250 -6750 4500 4200 2250 5300 3500 -2600 -3250
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Thank You For further details on research, you can reach us at [email protected] 022-42333480/022-42333484
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