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    Indian Commodity Market

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    Nikita Sanghvi
    The document provides an overview of the Indian commodity market, including its history, major commodities traded, participants, functioning, and regulatory framework. It discusses the growth of the market since 2003, with trading volumes increasing exponentially. Key drivers of growth have been the national commodity exchanges MCX, NCDEX, and NMCE. The market turnover grew from 1.29 trillion rupees in 2003/04 to 52.49 trillion rupees in 2008/09. The regulatory framework includes the Forward Contracts (Regulation) Act of 1952 and Forward Markets Commission, which provides oversight of recognized exchanges.

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    Indian Commodity Market

    Uploaded by

    Nikita Sanghvi
    404 views31 pages
    The document provides an overview of the Indian commodity market, including its history, major commodities traded, participants, functioning, and regulatory framework. It discusses the growth of the market since 2003, with trading volumes increasing exponentially. Key drivers of growth have been the national commodity exchanges MCX, NCDEX, and NMCE. The market turnover grew from 1.29 trillion rupees in 2003/04 to 52.49 trillion rupees in 2008/09. The regulatory framework includes the Forward Contracts (Regulation) Act of 1952 and Forward Markets Commission, which provides oversight of recognized exchanges.

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    The document provides an overview of the Indian commodity market, including its history, major commodities traded, participants, functioning, and regulatory framework. It discusses the growth of the market since 2003, with trading volumes increasing exponentially. Key drivers of growth have been the national commodity exchanges MCX, NCDEX, and NMCE. The market turnover grew from 1.29 trillion rupees in 2003/04 to 52.49 trillion rupees in 2008/09. The regulatory framework includes the Forward Contracts (Regulation) Act of 1952 and Forward Markets Commission, which provides oversight of recognized exchanges.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    404 views31 pages

    Indian Commodity Market

    Uploaded by

    Nikita Sanghvi
    The document provides an overview of the Indian commodity market, including its history, major commodities traded, participants, functioning, and regulatory framework. It discusses the growth of the market since 2003, with trading volumes increasing exponentially. Key drivers of growth have been the national commodity exchanges MCX, NCDEX, and NMCE. The market turnover grew from 1.29 trillion rupees in 2003/04 to 52.49 trillion rupees in 2008/09. The regulatory framework includes the Forward Contracts (Regulation) Act of 1952 and Forward Markets Commission, which provides oversight of recognized exchanges.

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    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 31

    DYNAMICS OF INDIAN

    COMMODITY MARKET

    Prepared By:
    Dipa Shah
    Nikita Sanghvi
    Bharat Maheshwari
    Krishna Rajput
    Mitesh Shah
    Keyur Savalia
    FLOW OF PRESENTATION

    • Introduction
    • Commodities Traded
    • Participants
    • Functioning
    • Agricultural Commodity Market
    • Ground Nut
    • Indian Commodity Market
    • Conclusion
    •
    HISTORY OF COMMODITY MARKET

    •Evolution
    •Indian Commodity Market -134 Year old
    •1875-“Bombay Cotton Trade Association Ltd”
    •India -the largest consumer of Gold
    •Indian Retail Market estimated to cross Rs
    10000 Billions by the year 2010
    COMMODITY AND COMMODITY EXCHANGES

    • Commodity
    • Commodity Exchange
    – Global Commodity Exchanges
    – National Commodity Exchanges
    – Regional Commodity Exchanges
    •
    COMMODITY EXCHANGES

    • Global Commodity Exchanges


    – NYMEX : New York Mercantile Exchange
    – LME : London Metal Exchanges
    – CBOT : Chicago Board of trade
    – SICOM : Singapore Commodity Exchanges
    – Kansas Board of trade and many more……
    •

    • National Commodity Exchanges


    1. NCDEX – National Commodity & Derivative
    2. MCX - Multi Commodity Exchange
    3. NMCEIL - National Multi Commodity Exchange India Ltd
    4. ICEX – Indian Commodity Exchange
    COMMODITY EXCHANGES
    • Regional Commodity Exchanges
    – Bombay Commodity Exchanges
    – Kanpur Commodity Exchanges
    – Ahmedabad Commodity Exchanges
    – Rajdhani Oil & Seeds Commodity Exchanges
    – The Chamber of Commerce
    – E Sugar India Ltd. (Mumbai)
    COMMODITIES TRADED IN INDIA
    PLAYERS IN THE DERIVATIVES MARKET

    • Hedger
    – Farmers, manufacturers, importers & exporter.
    – Buys or sells in the futures market to secure the future
    price of a commodity intended to be sold at a later
    date in the cash market.
    – Protect against price risks.
    PLAYERS IN THE DERIVATIVES MARKET

    Hedgers
    • Buyers • Sellers
    – They hold the long – They hold the short
    position in futures position in futures
    contracts. contracts.
    – They trying to secure – They trying to secure
    as low price as as high price as
    possible. possible.
    – –
    ØBoth parties try to reduce the risks associated with price
    volatility.
    PLAYERS IN THE DERIVATIVES MARKET

    Speculators
    • They do not aim to minimize risk but to benefit from
    the inherently risky nature of the commodity
    market.
    • They aim to profit from the very price change that
    hedgers are protecting.

    Arbitrage
    They do the simultaneous buying and selling of
    assets in different market taking advantage of
    differing prices.
    FUNCTIONING OF COMMODITY MARKET

    • Buyers & sellers


    • Pricing mostly
    • Contract states the price that will be paid and the date of
    delivery.
    • Almost all futures contracts end without the actual
    physical delivery.
    •
    DE IN AGRI-COMMODITY IN INDIAN COMMODITY MAR
    ONTHLY SPOT PRICE INDICES : ESTIMATES OF STANDA
    ON OF AGRI-COMMODITY CONSUMPTION BETWEEN IN
    2006-07
    COMPARISON OF PROD/CONS RATIO BETWEEN
    INDIA AND USA (2006-07)
    GROUNDNUT

    TRADING IN AGRI-COMMODITY- GROUNDNUT

    - Major groundnut consuming countries.


    - Groundnut exporting countries.
    - Groundnut producing countries.
    - Production of groundnut in India
    MARKET INFLUENCING FACTORS

    Weather conditions
    Monsoon status
    Price fluctuations
    International price movements.

    High consumption
    PERFORMANCE ANALYSIS OF
    INDIAN COMMODITY MARKET
    GROWTH OF INDIAN COMMODITY MARKET

    • Year 2003:
    ü Starting with trade in 7 commodities till 1999, futures trading now
    available in 95 commodities
    ü 54 prohibited commodities opened up for forward trading
    ü establishment and recognition of three new national exchanges with
    on-line trading and professional management
    • The volume of trade had increased exponentially since 2003- 04 to
    reach Rs. 36.77 lakh crore in 2006-07
    GROWTH OF INDIAN COMMODITY MARKET
    • Agricultural commodities - largest proportion of the total value of trade till
    2005-06 (55.32%)
    • Growth in 2006-07
    ü Bullion and metals (88.7%),
    ü Agricultural commodities (10.7%)
    • Reasons:-
    ü Stringent regulations, like margins and open interest limits
    ü dampening of sentiments due to suspension of trade in few commodities
    GROWTH OF INDIAN COMMODITY MARKET
    • Significant decline in trade in agriculture commodities during the
    year 2007-08, by 28.5%.
    • Trade in Chana, Maize, Mentha Oil, Guar seed, Potato, Guar Gum,
    Chilliesand Cardamom, which accounted for 57.9% of total
    futures trade in agricultural commodities in 2006-07, declined by
    over 66.4% during 2007-08 compared to previous year
    TRADING FROM APRIL 2007 - MARCH 2010 IN UNIT
    (AS PER MCX)
    TREND OF INDIAN COMMODITY MARKET
    RRENT SCENARIO OF INDIAN COMMODITY MAR

    • Total value of trade :


    ü Fy 2008/09 INR52.49 lakh crore
    ü Fy 2007/08 INR 40.66 lakh crore
    • Growth of 29.09%, under challenging economic conditions globally
    • Main drivers of growth :
    • MCX, NCDEX and NMCE along with two regional exchanges
    – NBOT Indore and ACE, Ahmedabad – contributed to 99.61% of
    the total value of commodities traded during 2008/09.
    RRENT SCENARIO OF INDIAN COMMODITY MAR

    • Turnover grew from 1.29 trillion rupees in 2003/04 to 52.49


    trillion rupees in 2008/09
    • Turnover bourses rose 49.80% to 73.51 trillion rupees in first
    eleven-and-a-half months of fiscal 2009/10
    • Active trade in gold, silver, copper and crude oil in the energy
    and metals pack during March ’10 first fortnight
    • Guar seed, chana, soybean, turmeric and jeera saw trade
    among agricultural commodities
    •
    REGULATORY FRAMEWORK
    • December 1952 -Forward Contracts (Regulation) Act, 1952,
    enacted
    • The Act provided for 3-tier regulatory system;
    ü a) An association recognized by the Government of India on
    the recommendation of Forward Markets Commission
    ü b) The Forward Markets Commission (set up in September
    1953)
    ü c) The Central Government
    •
    REGULATORY FRAMEWORK
    • Forward Contracts (Regulation) Rules were notified by the Central Government in
    July, 1954.

    • The Act divides the commodities into 3 categories with reference to extent of
    regulation, viz.:

    ü a) The commodities in which futures trading can be organized under the auspices of
    recognized association.

    ü b) The commodities in which futures trading is prohibited.

    ü c) Those commodities which have neither been regulated for being traded under the
    recognized association nor prohibited are referred as Free Commodities and the
    association organized in such free commodities is required to obtain the
    Certificate of Registration from the Forward Markets Commission.
    REGULATORY FRAMEWORK
    • Forward Markets Commission provides regulatory oversight
    in order to ensure -
    • financial integrity (i.e. to prevent systematic risk of default by
    one major operator or group of operators),
    • market integrity (i.e. to ensure that futures prices are truly
    aligned with the prospective demand and supply conditions)
    and
    • to protect and promote interest of customers/ non-members.
    CONCLUSION
    • Decade of commodities
    • Global commodity market is greater than stock market
    • India - Top producer of commodities
    • Market has enormous progress in technology,transpereny,and
    trading activity
    • Supports developing price and price risk management policy
    to decide upon prices of commodity
    • Price risk management for future uncertainty

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