Abstract
A Study on Financial Knowledge and Awareness of Investors in the Commodity Market – In Modern days, the field of investment is becoming more dynamic than olden days. International and National factors are growing rapidly that change the values of specific Investments. The aim of the study is to examine the investors awareness towards commodity market and to identify various factors influencing commodity trading and to understand the most preferred commodities by the investors in commodity trading. The study found out four factors that is trading frequency habits, goal of an investors, literacy awareness level and emotional risk tolerance. The study adopted descriptive research design, by collecting data from 155 respondents by using questionnaire. Collected data were analyzed with the help of percentage analysis and statistical package for social science (SPSS)and the hypothesis were tested using anova, correlation and T- test. Further it is found from the study that majority of the respondents strongly prefer to invest in the commodity Gold, Crude Oil, Silver, Natural Gas, Aluminum and Least Preferred Commodities are Zinc, Copper, Lead Investments in commodity trading are increasing nowadays in metro and urban area.
Introduction
The Indian commodity market requires huge investments and better trading activity both in the national as well as the regional commodity markets. The participation of non‐professional people trading commodity markets makes the market a risky venture. Non‐professional participants simply add to the instability factor of the market. There is a terrible need for professional experts who are able to provide advice on commodity trading and build commodity inclusive portfolios. Such professional awareness, expertise, and guidance in commodity trading can come from professional commodity traders called commodity trading advisors. Investment is the commitment of funds in an asset or financial instruments with the aim of generating future returns in the form of interest, dividend or appreciation in the value of the instrument.
Investment is involved in many areas of the economy, such as, business management and finance no matter from households, firms, or Governments. An investor has numerous investment options to choose from, depending on his risk profile and expectation of returns. Different investment options represent a different risk-reward trade off. Low risk investments are those that offer assured, but lower returns, while high risk investments provide the potential to earn greater returns. Hence, an investor’s risk tolerance plays a key role in choosing the most suitable investment.
Various investment options available are Bank Deposits, Commodities like Gold, Silver etc., Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits and Stock Market options like Bonds and Debentures, Mutual Funds, Equity Shares etc., Of the various types of investment options in the Stock Market, Gold Exchange Traded Funds happens to be one of the best options to be included in the portfolio for diversification of risk.
Types of Commodities in the Market
Available for trading are categorized into the following classes, based on their inherent nature,
Hard commodities
- Precious metals: Gold, platinum, copper, silver, etc.
- Energy: Crude oil, Natural gas, gasoline, etc.
Soft commodities
- Agriculture: Soybeans, wheat, rice, coffee, corn, salt, etc.
- Livestock and meat: Live cattle, pork, feeder cattle, etc.
Some examples of commodities in the market that were most in major commodity exchanges in India included crude oil and silver. While crude oil acts as one of the most important energy sources required for virtually every industry, silver is one of the most precious metals other than gold with a steady demand. As crude oil is not domestically available in abundance, almost 82% of it is imported from OPEC and Middle Eastern countries. Similarly, silver is traded in extensive quantities from countries such as Mexico, Peru, etc.
How to Invest in the Commodity Market
Commodity trading is managed by four major commodity exchanges in India:
- Multi Commodity Exchange (MCX)
- Indian Commodity Exchange (ICEX)
- National Commodity and Derivatives Exchange (NCDEX)
- National Multi Commodity Exchange (NMCE)
All activities of such nationwide exchanges come under the regulation of Commodity Derivatives Market Regulation (CDMRD) of Securities and Exchange Board of India, which merged with Forward Market Commission in 2015. Commodity markets facilitate an exchange of both physical goods and derivative contracts while the physical exchange is undertaken by institutional investors and commodity brokers aiming to realise gains through the resale of the products in the retail sector of the country. Conversely, a derivative contract does not require a physical store of the goods procured, as individuals can trade commodities online through digitised contracts, making the transaction hassle-free and convenient.
Scope of the Study
- The research is carried out to know the trading frequency habits, literacy awareness level, emotional risk tolerance and goal of an investors towards commodity market
- The research assesses the preference of choosing the market by the respondents
- This research also helps to know about trading mechanism of commodity market and future trading level.
Components of a Project Report
A project report varies according to the MBA final year project course at top colleges, depending on the consequences and the requirements of the concerned project. But broadly, a project covers the following components:
- Title page
- Table of contents
- Introduction
- Background of the project
- Project objectives
- Methodology
- Results
- Discussion and Analysis
- Conclusion
- Bibliography or references
- Appendices
Project Report Pages : 80
Can be used in : Finance Final Year Project
Delivery Time : Within 2 hours.
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