INVESTORS PREFERENCE IN COMMODITIES MARKET

INVESTORS PREFERENCE IN COMMODITIES				Coimbatore KARVY STOCK BROKING LIMITED. The
MARKET				study was undertaken to know the preference of
				the investors towards various Investment avenues in
� * K.Logeshwari				relation to commodity market. The sample from the
� ** V.Ramadevi				population is taken based on regular customers to
ABSTRACT				the Coimbatore Karvy. The expectations of the
The study entitled “Investors preference in				investors are quite high. Many expect high rate of
commodities market” was conducted in				return for further investment through commodity
Coimbatore KARVY STOCK BROKING LIMITED. The				market. The study also examines the phenomenal
study was undertaken to know the preference of				growth in commodity market which is ten times
the investors towards various Investment avenues in				greater than the share market. The study reveals
relation to commodity market. The sample from the				that the commodity market is in a nascent stage in
population is taken based on regular customers to				Coimbatore.
the Coimbatore Karvy. The expectations of the				The investment avenues of
investors are quite high. Many expect high rate of				individual investors depend mainly on annual income as
return for further investment through commodity				well as risk taking capacity of the individuals.
market. The study also examines the phenomenal				Regularity in investing, percentage of savings also has
growth in commodity market which is ten times				a major impact in choosing the investments. The
greater than the share market. The study reveals				study on investor’s preference in commodity
that the commodity market is in a nascent stage in				market also gives an idea of the investor’s
Coimbatore.				choice based on returns, risk and their awareness in
The investment avenues of				choosing the market particularly in conducting
individual investors depend mainly on annual income as				appropriate training sessions and seminars frequently
well as risk taking capacity of the individuals.				to the clients of Karvy Commodity market in
Regularity in investing, percentage of savings also has				Coimbatore at Karvy Commodity Trade Limited.
a major impact in choosing the investments. The
study on investor’s preference in commodity				INTRODUCTION
market also gives an idea of the investor’s
choice based on returns, risk and their awareness in				A commodity futures contract is a type of
choosing the market particularly in conducting				derivative, or financial contract, in which two parties
appropriate training sessions and seminars frequently				agree to transact a set of financial instruments or
to the clients of Karvy Commodity market in				physical commodities for delivery at a particular price
Coimbatore at Karvy Commodity Trade Limited.				at later date. But participating in the commodity
				market does not necessarily means that you will be
INTRODUCTION				responsible for receiving or delivering large inventories
				of physical commodities. Buyers and sellers in the
A commodity futures contract is a type of				futures market primarily enter into futures contracts
derivative, or financial contract, in which two parties				to hedge risk or speculate rather than delivery (which
agree to transact a set of financial instruments or				is the primary activity of the cash/spot market).
physical commodities for delivery at a particular price				That is the reason commodities are used as financial
at later date. But participating in the commodity				instruments by not only producers and consumers
market does not necessarily means that you will be				but also speculators.
responsible for receiving or delivering large inventories				* Lecturer, Department of management studies and
of physical commodities. Buyers and sellers in the				Research, Karpagam University , Coimbatore -
futures market primarily enter into futures contracts				641021 ,Tamilnadu
to hedge risk or speculate rather than delivery (which				* * Lecturer, Department of management studies
is the primary activity of the cash/spot market).				and Research, Karpagam University , Coimbatore
That is the reason commodities are used as financial				– 641021, Tamilnadu
instruments by not only producers and consumers
but also speculators.
* Lecturer, Department of management studies and				1. Commodity market is extremely liquid, risky and
Research, Karpagam University , Coimbatore -				complex by nature. Futures market is centralized
641021 ,Tamilnadu				market place for buyers and sellers from around the
* * Lecturer, Department of management studies				world who meet and enter into commodity futures
and Research, Karpagam University , Coimbatore				contracts. Pricing is mostly is based on an open cry
– 641021, Tamilnadu				system, or bids and offers that can be matched
				electronically. The commodity contract will state the
				price that will be paid and the date of delivery.
1. Commodity market is extremely liquid, risky and				Almost all futures contracts end without the actual
complex by nature. Futures market is centralized				physical delivery of commodity.
market place for buyers and sellers from around the
world who meet and enter into commodity futures				Commodity prices are generally less volatile than the
contracts. Pricing is mostly is based on an open cry				stocks. Therefore it’s relatively safer to trade in
system, or bids and offers that can be matched				commodities. But the volume being traded in
electronically. The commodity contract will state the				commodities is much less than the stock market. This
price that will be paid and the date of delivery.				is because of the two reasons that the investors are
Almost all futures contracts end without the actual				less aware about the commodities market and their
physical delivery of commodity.				risk perception. Hence many studies are conducted to
				know the investors’ preference in commodities
Commodity prices are generally less volatile than the				market.
stocks. Therefore it’s relatively safer to trade in
commodities. But the volume being traded in				STATEMENT OF THE PROBLEM
commodities is much less than the stock market. This				Commodity market has been established for the
is because of the two reasons that the investors are				benefit of small and large investors. But the level of
less aware about the commodities market and their				investment in this trading is far lesser than the other
risk perception. Hence many studies are conducted to				modes of investors. The need of the hour is the
know the investors’ preference in commodities				proper guidelines and education to all investors.. An
market.				investment in commodity market is though less risky
				than that of the stock market. This is because, the
STATEMENT OF THE PROBLEM				investors are less aware about commodities market.
Commodity market has been established for the				Hence the purpose of the study is to assess the
benefit of small and large investors. But the level of				knowledge and preference of the investors in the
investment in this trading is far lesser than the other				commodity trading.
modes of investors. The need of the hour is the				OBJECTIVES OF THE STUDY
proper guidelines and education to all investors.. An				PRIMARY OBJECTIVEv To study the
investment in commodity market is though less risky				investors’ preference towards commodities
than that of the stock market. This is because, the				market.
investors are less aware about commodities market.				SECONDARY OBJECTIVEv To identify the
Hence the purpose of the study is to assess the				investment patterns of investors.v To know
knowledge and preference of the investors in the				whether the investor’s opinion about international
commodity trading.				commodities market affects the national trading
OBJECTIVES OF THE STUDY				activity.v To identify the source of information
PRIMARY OBJECTIVEv To study the				about commodities market.v To profile the
investors’ preference towards commodities				commodities investors.
market.				SCOPE OF THE STUDY
SECONDARY OBJECTIVEv To identify the				v Understanding the investor’s risk
investment patterns of investors.v To know				towards commodity market.v The study helps
whether the investor’s opinion about international				us to know about the Investor’s preference
commodities market affects the national trading				towards commodity market.
activity.v To identify the source of information				RESEARCH METHODOLOGY
about commodities market.v To profile the				Research
commodities investors.				� : Descriptive Research
SCOPE OF THE STUDY				Data Source
v Understanding the investor’s risk				� : Primary and Secondary Data
towards commodity market.v The study helps				Primary Data
us to know about the Investor’s preference				Collection :
towards commodity market.				Survey Method
RESEARCH METHODOLOGY				Primary Data Collection
Research				Instrument : Questionnaire
� : Descriptive Research				Sampling Methods &
Data Source				Technique : Non-Probability
� : Primary and Secondary Data				Method, Convenience
Primary Data				�
Collection :				Sampling Technique
Survey Method				Sample size
Primary Data Collection				� : 150 respondents
Instrument : Questionnaire				Pilot
Sampling Methods &				� : 10 respondents
Technique : Non-Probability
Method, Convenience				TOOLS USED
�				PERCENTAGE ANALYSIS
Sampling Technique
Sample size				- The tool used for the sampling technique is
� : 150 respondents				percentage analysis.
Pilot				- It is used to determine the percentage of the
� : 10 respondents				samples to be selected from the entire population.
				CHISQUARE TEST
TOOLS USED
PERCENTAGE ANALYSIS				The chi-square test is an important test amongst
				the several tests of significance. Chi-Square,
- The tool used for the sampling technique is				symbolically written as (Pronounced as
percentage analysis.				Ki-Square), is a statistical measure used in the
- It is used to determine the percentage of the				context of sampling analysis for comparing a variance
samples to be selected from the entire population.				to a theoretical variance.
CHISQUARE TEST

The chi-square test is an important test amongst				=
the several tests of significance. Chi-Square,
symbolically written as (Pronounced as				where
Ki-Square), is a statistical measure used in the				Oij = Observed frequency of the
context of sampling analysis for comparing a variance				cell in ith row and jth column.
to a theoretical variance.				Eij = Expected frequency of the
				cell in ith row and jth column.

=				- The statistical tool is used for the analysis part of
				the study is chi-square test. It is a statistical measure
where				used in the context of sampling analysis foe
Oij = Observed frequency of the				comparing a variance to a theroretical variance.
cell in ith row and jth column.				- It can be used in calculations to test for statistical
Eij = Expected frequency of the				significance of estimated parameters and to measure
cell in ith row and jth column.				goodness of fit of individual equations in a model.

- The statistical tool is used for the analysis part of				LIMITATIONS OF THE STUDY
the study is chi-square test. It is a statistical measure				Though utmost care was taken to do the research,
used in the context of sampling analysis foe				some of limitations viz.,
comparing a variance to a theroretical variance.				v The study is limited to Coimbatore
- It can be used in calculations to test for statistical				city.v It is conducted only with the investors
significance of estimated parameters and to measure				of KAVRY com trade private limited.v The
goodness of fit of individual equations in a model.				data collected from the samples might not be
				completely appropriate.v The respondents
LIMITATIONS OF THE STUDY				were less interested in answering the questionnaire,
Though utmost care was taken to do the research,				as they felt that it was an interruption to their regular
some of limitations viz.,				work.v All respondents were not very much
v The study is limited to Coimbatore				open in giving their details. As the questionnaire
city.v It is conducted only with the investors				contains details of the trader’s income the trader
of KAVRY com trade private limited.v The				might not have given the correct information for
data collected from the samples might not be				their own savings (for tax problem).
completely appropriate.v The respondents
were less interested in answering the questionnaire,
as they felt that it was an interruption to their regular
work.v All respondents were not very much
open in giving their details. As the questionnaire
contains details of the trader’s income the trader
might not have given the correct information for
their own savings (for tax problem).



				RESULTS AND DISCUSSIONS



				Ø It is found that 86%of the respondents belong
				to male gender and 68% of the respondents are
				married.
				- Respondents to the extent of 40% belong to the
RESULTS AND DISCUSSIONS				age group of 26 years to 50 years.
				Ø About 48% of the respondents are
				postgraduates.
				Ø About 46% of the respondents are salaried.
Ø It is found that 86%of the respondents belong				Ø The study reveals that 52% of the
to male gender and 68% of the respondents are				respondent’s annual income ranges between Rs.
married.				1, 00,000 to Rs 5, 00,000.
- Respondents to the extent of 40% belong to the				- It is found that 42%of the respondents specify
age group of 26 years to 50 years.				Gold in Bullion market.
Ø About 48% of the respondents are				Ø It is found that 48% of the respondents specify
postgraduates.				Peeper in Agri-commodity market
Ø About 46% of the respondents are salaried.				- It is found that 44% of the respondents specify
Ø The study reveals that 52% of the				Zinc in Metals.
respondent’s annual income ranges between Rs.				Ø About 54% of the respondents invest 25 % to
1, 00,000 to Rs 5, 00,000.				50% of their income.
- It is found that 42%of the respondents specify				- About 62% of the respondents will definitely
Gold in Bullion market.				recommend others to enter in to the commodity
Ø It is found that 48% of the respondents specify				market.
Peeper in Agri-commodity market				Ø It is found that 38 %of the respondents were
- It is found that 44% of the respondents specify				referring friends as their source of information.
Zinc in Metals.				Ø About 36% of the respondents will rank 2nd
Ø About 54% of the respondents invest 25 % to				& 3rd place in their specialty of trading in
50% of their income.				commodity market as Price Hedging
- About 62% of the respondents will definitely				Ø About 38% of the respondents rank 3rd place in
recommend others to enter in to the commodity				Regulated market.
market.				Ø About 46% of the respondents rank 1st place in
Ø It is found that 38 %of the respondents were				High return.
referring friends as their source of information.				- Majority 62% of the respondents do their trading
Ø About 36% of the respondents will rank 2nd				daily.
& 3rd place in their specialty of trading in				Ø About 56% of the respondents aware about the
commodity market as Price Hedging				commodity market to some extent.
Ø About 38% of the respondents rank 3rd place in				Ø About 52% of the respondents are been
Regulated market.				satisfied with their commission charges paid.
Ø About 46% of the respondents rank 1st place in				Ø Majority 66% of the respondents are been
High return.				traded up to the margin money below 5, 00,000.
- Majority 62% of the respondents do their trading				Ø About 40% of the respondents are satisfied
daily.				with their level of returns.
Ø About 56% of the respondents aware about the				Ø It is found that 97% of the respondents agree
commodity market to some extent.				that international market has got an impact over
Ø About 52% of the respondents are been				national market.
satisfied with their commission charges paid.				Ø About 70% of the respondents’ High risk is
Ø Majority 66% of the respondents are been				involved in the commodity market.
traded up to the margin money below 5, 00,000.				Ø Majority 82% of the respondents will also invest
Ø About 40% of the respondents are satisfied				in other modes of investment.
with their level of returns.				Ø Respondents to the extent of 50% invest in the
Ø It is found that 97% of the respondents agree				shares.
that international market has got an impact over				Ø Out of their past experience respondents would
national market.				take to control risk by 36% while at the time of
Ø About 70% of the respondents’ High risk is				buying and selling the commodities.
involved in the commodity market.
Ø Majority 82% of the respondents will also invest				CONSIDERED RECOMMENDATIONS
in other modes of investment.
Ø Respondents to the extent of 50% invest in the
shares.				Ø The company can rise up its investments by
Ø Out of their past experience respondents would				educating the public about the benefits that they can
take to control risk by 36% while at the time of				reap from the commodities market through
buying and selling the commodities.				awareness programs, advertisements.
				Ø Since most of the investors are those who
CONSIDERED RECOMMENDATIONS				trade in share market and it is very easy to make
				them invest in higher margin commodities.
				Ø The findings reveal that majority of the
Ø The company can rise up its investments by				investors are within the age group of 26-35 years, so
educating the public about the benefits that they can				the company can provide their customers some
reap from the commodities market through				additional assistance like daily trading tips, daily
awareness programs, advertisements.				positions, and general news for doing a better trading
Ø Since most of the investors are those who				with the commodities market.
trade in share market and it is very easy to make				Ø The investors in Coimbatore are not much aware
them invest in higher margin commodities.				of commodity market and the commodities being
Ø The findings reveal that majority of the				traded in the commodity market. So, awareness
investors are within the age group of 26-35 years, so				about the commodity market and the commodities
the company can provide their customers some				being traded.
additional assistance like daily trading tips, daily				Ø A regular investor’s friendly seminar can be
positions, and general news for doing a better trading				organized to suit the timings of the investing public.
with the commodities market.				Seminars can be in the form of interactive sessions,
Ø The investors in Coimbatore are not much aware				arranged at frequent intervals.
of commodity market and the commodities being				Ø The newsletters published by Karvy must include
traded in the commodity market. So, awareness				the suggestions provided by the research team to
about the commodity market and the commodities				help the investors to better understand the tactics
being traded.				of trading in commodity market. Hence newsletter
Ø A regular investor’s friendly seminar can be				can be published for guidance.
organized to suit the timings of the investing public.				Ø Workshops can be conducted in villages for the
Seminars can be in the form of interactive sessions,				farmers to educate them about commodity market.
arranged at frequent intervals.
Ø The newsletters published by Karvy must include
the suggestions provided by the research team to
help the investors to better understand the tactics
of trading in commodity market. Hence newsletter				CONCLUSION
can be published for guidance.				Commodities market provides a platform for the
Ø Workshops can be conducted in villages for the				investors as well as hedgers to protect their
farmers to educate them about commodity market.				economic interests as well as increase their investible
				wealth. However, there is a need to profile the
				investors in this market with their preferences and
				pattern. This will help the commodity trading
				companies to focus their offerings to suit the needs
CONCLUSION				of the commodity investors. Also, the companies
Commodities market provides a platform for the				should understand the expectations of their clients
investors as well as hedgers to protect their				and their level of satisfaction. With this in mind, a
economic interests as well as increase their investible				study was conducted through the Karvy Comtrade
wealth. However, there is a need to profile the				Limited, where a sample of 150 respondents was
investors in this market with their preferences and				drawn for study. A structured questionnaire with
pattern. This will help the commodity trading				the relevant indicators was administered to primarily
companies to focus their offerings to suit the needs				identify the investors’ preference towards
of the commodity investors. Also, the companies				commodities market. The study also intended to
should understand the expectations of their clients				identify the investment patterns of investors, to
and their level of satisfaction. With this in mind, a				know the investors’ opinion on the effect of
study was conducted through the Karvy Comtrade				international commodities market over the national
Limited, where a sample of 150 respondents was				trading activity, to identify the source of information
drawn for study. A structured questionnaire with				about commodities market, and to profile the
the relevant indicators was administered to primarily				commodities investors.The investors are not fully
identify the investors’ preference towards				aware of the functioning of commodity market and
commodities market. The study also intended to				they draw market information from Print media, Web
identify the investment patterns of investors, to				media and Peer groups.
know the investors’ opinion on the effect of
international commodities market over the national
trading activity, to identify the source of information
about commodities market, and to profile the				BIBILIOGRAPHY
commodities investors.				1. Pandey .I.M. Financial Management, Vikas publishing
				house Pvt Ltd(1991) 9 th edition
1. The investors are not fully aware of the				2Kothari Rubin , Statistics for Management , Prentice
functioning of commodity market and they draw				Hall of India Pvt. Ltd 8 th edition
market information from Print media, Web media and				3Kothari C.R. Research Methodology , New Age
Peer groups.				International Pvt Ltd 8 th edition
				4.The Karvy Finapolis Magazine – Weekly ,
INVESTORS PREFERENCE IN COMMODITIES				Monthly & Yearly edition
MARKET

� * K.Logeshwari
� ** V.Ramadevi				WEB SITES
ABSTRACT				1. .com
The study entitled “Investors preference in				2. .com
commodities market” was conducted in				3. www. 4.

VentureInc.

INVESTORS PREFERENCE IN COMMODITIES MARKET