a study on compariion of online with offline trading in commodities

A STUDY ON COMPARISION OF ONLINE WITH OFFLINE TRADING IN COMMODITIES

ABSTRACT

This project titled “A study on comparison of online with offline

trading in commodities” describes about now the clients are select the

medium (online or offline) while involved in trading activity particularly in

commodity market and what are the factors determine that medium and what

are the things they expect from stock exchange.

It is important that people need to understand the dynamic and the

compulsion of the financial market. Whether it is share market or any other

financial market nowadays investors goes an the sentiments of the market

without actually studying in which investments is being market moreover

the some investor usually does not have eldgenate knowledge about the

trading types and those features.

Generally when correction factor occurs in the market most of the

funds will turn red and will not perform well. But there are few funds, which

are consistent ever when occurs these funds will yield return on the

investments made even when the market is improper.

1

TABLE OF CONTENTS

CHAPTER CONTENTS PAGE NO

1

1Introduction 1

Need and Scope of the study 2

Objectives 2

Industry Profile 3

Company Profile 6

Product Profile 16

Research Methodology 21

2. Data Analysis and Interpretation 36

3. Findings 50

4. Suggestions 51

5. Conclusion 52

References 53

2

LIST OF TABLES

TABLE NO. CONTENTS PAGE NO

1. Table based on Age 35

2. Table based on Sex 36

3. Table based on Educational Qualification 37

4. Table based on Experience 38

5. Table based on Online Trading 39

6. Table based on Offline Trading 40

7. Table based on Commodity Trading 41

8. Table based on Intraday Trading 42

9. Table based on Delivery Day Commission 43

10.Table based on Credit Limit Provided by The Company

44

11.Table based on What they like mostly online or offline Trading

45

12. Table based on Online Commodity 46

13. Table based on Offline Commodity 47

14.Table based on Expectation of other facilities

48.

3

LIST OF CHARTS

CHART NO. CONTENTS PAGE NO

1. Chart based on Age 35

2. Chart based on Sex 36

3. Chart based on Educational Qualification 37

4. Chart based on Experience 38

5. Chart based on Online Trading 39

6. Chart based on Offline Trading 40

7. Chart based on Commodity Trading 41

8. Chart based on Intraday Trading 42

9. Chart based on Delivery Day Commission 43

10.Chart based on Credit Limit Provided by The Company

44

11.Chart based on What they like mostly online or offline Trading

45

12. Chart based on Online Commodity 46

13. Chart based on Offline Commodity 47

14.Chart based on Expectation of other facilities

48.

4

1. INTRODUCTION

Angel Broking has once again been awarded the prestigious ‘Major

Volume Driver’ award for the second consecutive year of 2005-2006 by

The Bombay Stock Exchange. This coveted title was earlier conferred upon

Angel by the BSE for the year 2004-2005. About the Group.

The Angel Group has emerged as one of the top 5 retail stock broking

houses in India, having memberships on BSE, NSE and the two leading

commodity exchanges in the country i.e. NCDEX and MCX. Angel Broking

Ltd is also registered as a depository participant with CDSL. It is the only

100% retail stock broking house offering a gamut of retail centric services

like Research, Investment Advisory, and Wealth Management Services, E-

Broking & Commodities to individual investor.

The group is promoted by Mr. Dinesh Thakkar and professionally

managed by a team of 1980+ direct employees. It has a nation wide network

comprising 12 Regional Centres , 66 branches, 2997+ registered sub brokers

and business associates and 6370+ active trading terminals which cater to

the requirements of 244736+ retail clients.

5

http://www.angeltrade.com/

NEED FOR THE STUDY

During my studies I knew something about the company, but now I

have specialized in a particular department for gaining industrial knowledge

about financial department for further continuation of my studies.

Because all departments will not give overall up to date knowledge

about industry, if we went for particular department overall functioning of

department will come to know. This company is one of the leading and

professionally managed stock broking firm involved in quality services and

research..

OBJECTIVE OF THE STUDY

1. To know about a particular department functioning in the

organization.

2. To understand about the different managerial styles used in various

kind of management.

3. To know about the workers comfort in the organization.

4. To understand about the difficulties of industry in the competitive

world.

5. To gather practical knowledge in financial department.

6

INDUSTRY PROFILE

The financial market in India is one of the oldest in the world and is

considered to be the fastest growing and best among all the markets of the

emerging economies. The history of Indian capital markets dates back 200

years toward the end of the 18th century when India was under the rule of

the East India Company. The development of the capital market in India

concentrated around Mumbai where no less than 200 to 250 securities

brokers were active during the second half of the 19th century.

The financial market in India today is more developed than many

other sectors because it was organized long before with the securities

exchanges of Mumbai, Ahmedabad and Kolkata were established as early as

the 19th century. By the early 1960s the total number of securities exchanges

in India rose to eight, including Mumbai, Ahmedabad and Kolkata apart

from Madras, Kanpur, Delhi, Bangalore and Pune. Today there are 21

regional securities exchanges in India in addition to the centralized NSE

(National Stock Exchange) and OTCEI (Over the Counter Exchange of

India).

However the stock markets in India remained stagnant due to stringent

controls on the market economy that allowed only a handful of monopolies

to dominate their respective sectors. The corporate sector wasn’t allowed

into many industry segments, which were dominated by the state controlled

public sector resulting in stagnation of the economy right up to the early

1990s. Thereafter when the Indian economy began ‘liberalizing’ and the

7

controls began to be dismantled or eased out, the securities markets

witnessed a flurry of IPOs that were launched. This resulted in many new

companies across different industry segments to come up with newer

products and services.

A remarkable feature of the growth of the Indian economy in recent

years has been the role played by its securities markets in assisting and

fuelling that growth with money rose within the economy. This was in

marked contrast to the initial phase of growth in many of the fast growing

economies of East Asia that witnessed huge doses of FDI (Foreign Direct

Investment) spurring growth in their initial days of market decontrol. During

this phase in India much of the organized sector has been affected by high

growth as the financial markets played an all-inclusive role in sustaining

financial resource mobilization. Many PSUs (Public Sector Undertakings)

that decided to offload part of their equity were also helped by the well-

organized securities market in India.

The launch of the NSE (National Stock Exchange) and the OTCEI

(Over the Counter Exchange of India) during the mid 1990s by the

government of India was meant to usher in an easier and more transparent

form of trading in securities. The NSE was conceived as the market for

trading in the securities of companies from the large-scale sector and the

OTCEI for those from the small-scale sector. While the NSE has not just

done well to grow and evolve into the virtual ‘backbone’ of capital markets

in India the OTCEI struggled and is yet to show any sign of growth and

development. The integration of IT into the capital market infrastructure has

been particularly smooth in India due to the country’s world class IT

8

industry. This has pushed up the operational efficiency of the Indian stock

market to global standards and as a result the country has been able to

capitalize on its high growth and attract foreign capital like never before.

The regulating authority for capital markets in India is the SEBI

(Securities and Exchange Board of India). SEBI came into prominence in

the 1990s after the capital markets experienced some turbulence. It had to

take drastic measures to plug many loopholes that were exploited by certain

market forces to advance their vested interests. After this initial phase of

struggle SEBI has grown in strength as the regulator of India’s capital

markets and as one of the country’s most important institutions.

9

COMPANY PROFILE

Name of the company : Angel Broking

Address of the company : Chennai regional office,

Gr.Floor ,45ttk road,

Alwarpet,

Chennai-600018

Phone Number : 044 42269000

Email address : [email protected]

Website : www.angeltrade.com

Name of directors : Mr. Dinesh Thakkar

Mr. Mukesh Gandhi

Angel Broking Limited is one of the leading and professionally

managed stock broking firm involved in quality services and research. Angel

Broking Limited is a corporate member of The Stock Exchange, Mumbai.

The membership of the company with The Stock Exchange Mumbai

was originally in the name of Mukesh R. Gandhi, which was eventually

turned into a corporate membership in the name of Angel Broking Limited.

Angel Broking Limited is managed by Mr. Dinesh Thakkar and he is

well supported by Mr. Mukesh Gandhi, a fifteen years veteran in the market.

10

The group is well supported by a professional and qualified research

team and efficient operations and back office team, which comprises of

highly dedicated and qualified individuals. Angel has an in-house, state of

art research department.

Angel believes in reaching out to the customer at the farthest end

rather than by reaching out to them. The company in its endeavour to give its

client the best has opened up several branches all over Mumbai, which are

efficiently integrated with the Head Office.

Angel Broking Limited is primarily into retail stock broking, with a

customer base of retail investors, which has been increasing at a

compounded growth rate of 100% every year. The company has huge

network sub-brokers in Mumbai and other places outside Mumbai,

registered with SEBI, who act as chanel partners for the company. The

company presently has a total staff strength of around 150 employees who

are spread accordingly across the head office and all the branches.

Angel has empowered its physical presence throughout India through

various strategies which it has been adopting efficiently and effectively over

a period of time, like opening up of branches at various places, tie-ups with

various agencies and sales agents, buy-outs of smaller regional outfits and

appointment of sub-brokers and franchisees

Our Vision

11

To Provide

Best Value For Money

To Investors Through

Innovative Products,

Trading / Investment Strategies,

State-of-the-art Technology

And Personalized Service.

Our Business Philosophy

Ethical practices & transparency in all our dealings

Customer interest above our own

Always deliver what we promise

Effective cost management

Our Quality Assurance Policy

12

We are committed to being the leader

In providing World Class Product & Services

Which exceed the expectations of our customers

Achieved by teamwork and

A process of continuous improvement

Our CRM Policy

A Customer is the most Important Visitor

On Our Premises

He is not Dependent on us but

We are dependant on him

He is not interruption in our work,

But is the Purpose of it

We are not doing him a favor by serving

He is doing us a favor by giving us an

13

Opportunity to do so

Angel Broking Ltd.- BSE-612, INB010996539, UIN 100002972

Angel Capital & Debt Market Ltd. - NSE-12798, Cash - INB231279838,

F&O - INF231279838 UIN 100002964

Angel Commodities Broking Pvt. Ltd.- MCX-12685,

MCX/TCM/CORP/0037 | NCDEX-00220, NCDEX/TCM/CORP/0302, UIN

10059063

Angel Securities Ltd. - Cash INB010994639, F&O INF010994639, UIN

100002956

E-BROKING

Welcome to the World of E-Broking

Our e-broking facility is one such effort, which gives you access to state-of-the-art trading platform with multiple exchanges, order and trade confirmations, research reports, e-contracts and a 24x7 on-line web enabled centralized back-office system at the click of a button.

Multiple exchanges on a single screen

Intra-day calls and flash news

Historical charts with technical tools

Streaming quotes

24x7 web enabled back – office

Auto pay-in of shares

Online transfer of funds

14

E-BROKING:

Multiple exchanges on single screen

Intra-day calls & flash news

Historical charts with technical tools

RESEARCH:

Daily services

Technical services

Fundamental services.

INVESTMENT ADVISORY SERVICES:

Angel offers personalized advisory services to HNI investors and

actively assists them in managing their portfolio...

COMMODITIES:

State-of-the-art internet trading platform

Trading & educational seminar

Efficient risk management

DEMAT SERVICES:

Hassle free automated pay-in

Wide branch coverage

15

Centralized billing & accounting

VALUE ADDED BACK OFFICE SERVICES:

Web enabled centralized back-office

Centralized help desk services

E-contract notes cum bills.

About Angel Group

Angel group is engaged in various activities such as trading / advisory

services in Indian capital markets viz., equity, futures and options etc. and

also in Indian commodities markets viz., commodities futures.

About Angel Commodities

ANGEL COMMODITIES BROKING (P) LIMITED promoted by

ANGEL GROUP, started its operations in Indian commodities market by

acquiring memberships in India's premier multi-commodity exchanges of

NCDEX (Membership No:00220) and MCX (Membership No: 12685).

ANGEL COMMODITIES offers trading opportunities in commodity

markets through the chain of its branches spread across the country.

ANGEL COMMODITIES provides expert research / analysis to its

clients in various commodities, listed in NCDEX and MCX including the

international perspective of the commodities traded. It provides best

technical analysis from desk of its trained and qualified analysts.

16

The research team of angel commodities consists of professionals who

are industry veterans. The team is capable of formulating trading strategies

depending on risk-return profile of the client. Today we offer a gamut of

financial products to satisfy an array of financial needs.

Why trade with Angel Commodities?

We have the following application and services to provide you best

trading opportunities available in the industry.

Online application based trading software

Online web based trading platform

Online daily, weekly and monthly research

Transparent and fair trade execution

Individual client attention

24*7 online back office

Training/education facilities / conduct of seminars

State-of-the-art technology

Digital contract notes cum bill: View your accounts from any where,

any time

Efficient risk management

Competitive brokerage rates

Salient features of angel trade :

17

Multiple exchanges on a single screen: Online trading on BSE /

NSE (Cash and F&O), MCX and NCDEX on a single screen.

Speed: We use the latest technology to generate efficient uptime

and greater stability to give you high speed.

Competitive brokerage rates: We believe in providing our

clients the best value added services at the most competitive

brokerage rates.

Optimum margins: Angel gives you the trading exposure at

optimum margin level

Online funds transfer: The clients enjoy the convenience of

online transfer of funds from their bank accounts, to the margin

account of Angel, online.

Personalized service: HNI clients can avail of personalized

advisory services from our trained and experienced dealers,

regarding trading opportunities.

Off line services: You are free to make a telephone call to any of

our 71 well equipped branches across the country.

Technology: Angel provides the latest infrastructure tools to

support and integrate the backend and front office functionalities.

Back office infrastructure: We provide an automated web

enabled centralized back-office whereby the clients can have

access to their trade confirmation reports, holding statement, their

net position, the margins and the statement of accounts and

18

ledgers on a 24 X 7 basis.

Technical support: We remove technical difficulties through an

online support system managed by qualified professionals.

E - Contract notes cum bills: We provide contract notes cum

bills in electronic form resulting in ease of access to trades carried

out by the clients on any particular day.

19

PRODUCT PROFILE

Commodity market

Commodities are more than what you think they are. Almost

everything you see around is made of what market considers commodity. A

commodity could be an article, a product or material that is bought and sold.

It could be any kind of movable property, except actionable claims, money

and securities. Commodity trade forms the backbone of world economy.

The Indian commodity market is estimated to be around Rs. 11

million, and forms almost 50 percent of the Indian GDP. This market

constitutes Agri and Non Agricultural Products. Agricultural commodities

are those like rice, wheat, groundnut, tea, coffee, jute, rubber, spices and

cotton,Vegetable Oils etc.,while Non Agricultural Commodities can be

classified as Precious metals such gold and silver, base metals like iron and

aluminum,tin,nickel etc., and energy commodities such as crude oil and

coal.

So what do the commodity brokers actually do? They simply facilitate the

business of buyers and sellers, for a legalized rate of commission.

SEEDS

Castor Seed

Copra

Cotton Seed

Cumin Seed (Jeera)

20

Groundnut

Linseed

Rape/Mustard Seed

Rape Seed-42

Safflower

Sesame Seed

Soybean

Sunflower seed

Yellow Soybean Meal

OILS

Castor Oil

Coconut Oil

Cotton Seed Oil

Groundnut Oil

Linseed Oil

Rape/Mustard Seed Oil

Safflower seed Oil

Sesame seed Oil

Soybean Oil

Sunflower seed Oil

Crude Palm Oil

21

RBD Palmolein

Rice bran Oil

Vanaspati

OIL CAKES

Castor Oilcake

7Coconut Oilcake

Cotton Seed Oilcake

Groundnut Oilcake

Linseed Oilcake

Rape/Mustard Seed Oilcake

Safflower seed Oilcake

Sesame Oilcake

Soybean Oilcake

Sunflower seed Oilcake

22

METALS

Aluminum

Copper

Gold (100 Gms)

Kilo Gold

Lead

Nickel

Silver

Steel Flat

Steel Long

Tin

Zinc

SPICES

Pepper

Cardamom

Turmeric

Red Chilli

PULSES

Gram

Tur/Arhar

Urad

23

Moong

Masoor

Yellow Peas

OTHERS

Rubber

Sacking

Sugar

Gur

Guarseed

Guarseed Bandani

Wheat

Rice

Raw Jute

Kapas

Medium Staple Cotton

Long Staple Cotton

Cashew Kernel

Maize

24

RESEARCH METHODOLOGY

Research

Research refers to a critical, careful and exhaustive investigation or

inquiry or experimentation having has its aim the revision of accepted

conclusions, in the light of newly discovered facts.

Redman and mory has explained research as “systematizied effort to

gain knowledge”

Research methodology

Research methodology is a way to systematically solve the

research problem. It is necessary to know the methodology of the research.

The present study depends upon primary and secondary data collected from

public in Salem city.

Population

Population refers to the total of items about which information is

desired. The population of universe can be finite or infinite. The population

is said to be finite if it consist of a fixed number of elements so that it is

possible to enumerate it in it totality. An infinite population is that

population in which it is theoretically impossible to observe all the elements.

We can’t have any idea about the total.

Sample size

From the portion of total population I have selected 100 respontent for

doing the research.

25

Collection of time

There are two processes in collecting data. They are primary and

secondary data, which I have used for collecting the data, is both primary

and secondary data.

Primary data

In primary data the interview schedule is used to collect the information

from the employees in the organization

Secondary data

Secondary data is used to collect information from the internet and

also from the past records.

Data analysis

The collected data from the respondents was analyzed with the help of

simple percentage method.

What is commodity?

Commodity markets are those markets where raw or primary products are

exchanged. These raw commodities are traded on regulated commodities

exchanges in which they are bought and sold in standardized Contracts. This

is called commodity trading.

For a commodity market to be established there must be broad consensus

on the variations in the product that make it acceptable for one purpose or

another.

Generally, Governments must provide a common regulatory or

insurance standard and some release of liability, or at least a backing of the

26

insurers, before a commodity market can begin trading.

Unless the product or service can be guaranteed or insured to be free

of liability based on where it came from and how it got to market it becomes

impossible for sellers to guarantee a uniform delivery.

Indian commodities exchange

Commodity trading is increasingly becoming a prominent business in

India. To facilitate this trading there are various exchanges setup in India.

These exchanges are the hub of the trading of various commodities.

The primary Indian commodity exchange is the Multi Commodity

Exchange of India (MCX). The other very prominent commodity exchange

is National Commodities and Derivatives Exchange Limited.

NCDEX is located in Mumbai and offers facilities in more than 550

centers in India.

MCX features amongst the world's top three bullion exchanges and

top four energy exchanges.

MCX is the only Exchange in India to have such investment and

technical support from the commodity relevant institutions.

The day-to-day operations of the Exchange are managed by the

experienced and qualified professionals with impeccable integrity and

expertise.

27

MCX INDIA

Organized commodity trading is one of the latest money earning vehicles

in India. MCX (ISO 9001:2000) is an independent and de-mutualised multi

commodity exchange.

Inaugurated on November 10, 2003, MCX has permanent recognition

from the Government of India for facilitating online trading, clearing and

settlement operations for commodity futures markets across the country.

Today, MCX features amongst the world's top three bullion

exchanges and top four energy exchanges.

The average daily turnover of MCX is approximately USD 1.52

billion (INR 7, 000 Crore for the Apr – Jun 2006 quarter) with a record peak

daily turnover of USD 3.98 billion (INR 17,987 Crore) on April 20,2006.

In the second calendar quarter of 2006, MCX holds more than 55% market

share of the total trading volume of all the domestic commodity exchanges.

The exchange has also affected large deliveries in domestic commodities,

signifying the efficiency of price discovery.

NCDEX INDIA

India is fast progressing in the area of commodity and derivatives trading

under the aegis of the National Commodity and Derivatives Exchange

Limited.

NCDEX is a closely held private limited company incorporated on

April23, 2003, under the Companies Act 1956.It obtained its Certificate for

Commencement of Business on May9, 2003. It has commenced its

28

operations on December15, 2003.

NCDEX has an independent Board of Directors and professionals not

having vested interest in commodity markets. NCDEX is regulated by

Forward Market Commission (FMC) in respect of futures trading in

commodities.

Besides, NCDEX is subjected to various laws of the land like the

Companies Act, Stamp Act, Contracts Act, Forward Commission

(Regulation) Act and various other legislations, which impinge on its

working.

On February3rd, 2006, the FMC found NCDEX guilty of violating

settlement price norms and ordered the exchange to fire one of their

executive. NCDEX is located in Mumbai and offers facilities in more than

550 centers in India.

Commodity option trading system

The commodity options trading system basically consists of a market in

which producers may purchase the opportunity to sell or buy a commodity at

a certain price. This is similar to a situation where a farmer may purchase the

right from an insurance firm to collect on a policy in case his buildings burn,

he can purchase the right to sell his commodities at a specific price if market

prices go below the specified price.

In fact a separate market exists where purchase of the right to buy

commodities at a specified price of market prices are higher than the

specified price. Therefore, effectively there are really two separate

commodity options trading systems - one where it is possible to insure

products being sold against price declines, and another where it is possible

29

to insure products purchased against price increases.

People who participate in the commodity options trading systems have

the opportunity but not the obligation to exercise their agreement. This is the

reason that the system is appropriately named the option trading system

since they deal in an option, not an obligation.

To explain this concept further, for instance, if a person desires to buy the

right to sell a given commodity for a certain price, the commodity options

market provides the opportunity. By paying the market-determined

premium, the person could then collect on the option if prices are below the

price at which the deal was finalized when the corn would actually be sold.

If prices are higher than the price at which the deal was finalized, the

commodity could be sold for the higher price and the cost of the premium is

absorbed.

As mentioned, there are actually two basic types of commodity option

trading systems: a call option and a put option. The call option gives the

holder the right, but not the obligation, to buy the underlying commodity

from the option writer at a specified price on or before the option's

expiration date.

On the other hand, the put option gives the holder the right, but not the

obligation, to sell the underlying commodity to the option writer at a

specified price on or before the option's expiration date. The call option and

the put option are two distinct contracts.

30

Commodity futures trading commission

The mission of the Commodity Futures Trading Commission is

primarily to protect the market users and the public from malpractices such

as fraud, manipulation, and abusive practices related to the sale of

commodity and financial futures and options, and to foster open,

competitive, and financially sound futures and option markets.

The Congress created the Commodity Futures Trading Commission in

1974 as an independent agency with the mandate to regulate commodity

futures and option markets in the United States. The basic mandate taken up

by the agency was to renew and expand since then.

Today, the Commodity Futures Trading Commission regulates the

economic utility of the futures markets by encouraging their competitiveness

and efficiency, ensuring their integrity, protecting market participants

against manipulation, abusive trading practices, and fraud, and ensuring the

financial integrity of the clearing process.

It is through effective oversight, that the Commodity Futures Trading

Commission enables the futures markets to serve the important function of

providing a means for price discovery and offsetting price risk.

The CFTC monitors markets and market participants closely by

maintaining, in addition to its headquarters office in Washington, offices in

cities that have futures exchanges-New York, Chicago, Kansas City, and

Minneapolis.

Benchmarked against the functions and responsibilities assumed by

the Commodity Futures Trading Commission in the United States, The

Forward Markets Commission (FMC) was set up as the regulatory body for

31

Commodity Trading in futures/forward trade in India. Similar to the function

of the CFTC, The Forward Markets Commission is responsible for

regulating and promoting futures trade in commodities in India.

The FMC has its headquarters in Mumbai and the regional office is

located in Kolkata.

There are some 21 commodity exchanges in India. But most of these

commodity exchanges are regional, offline and commodity specific. The

government has recently allowed four national level multi-commodity

exchanges to trade in all permitted commodities

Commodity trading advisors

Commodity Trading Advisors usually use proprietary trading programs

that buy and sell commodities and financial futures around the globe and

specifically in India to seize profit opportunities in a variety of markets. The

set of Commodity Trading Advisors in India are an increasingly popular and

potentially profitable investment alternative for institutional investors and

high-net-worth individuals and are an emerging option especially in India.

The Chartered Alternative Investment Analyst SM programme is the

industry's global professional standard that covers commodities and

managed futures since its inception. The hedge funds have so far captured

most of the media and publishers' attention and little has been done to

provide investors with a comprehensive review of the fast growing

Commodity Trading Advisors.

The Commodity Trading Advisors usually investigate the many benefits

and risks examining the risk/return characteristics of a number of different

32

strategies. There are many issues related to Commodity Trading Advisors

investment, fees and regulations.

Much of the information relating to Trading Advisors can be technical in

nature.

When they look for portfolio diversification, they investigate futures

programs.

Unlike other asset classes, where profits depend solely on price

appreciation, opportunities in futures exist in both rising and falling markets,

in areas all around the world in at least 50 different futures markets.

You need to find a Commodity Trading Advisors program that suits your

financial objectives and risk parameters. It would be necessary to monitor

many managed programs, and have good working relationships with the

commodity trading advisors whose programs are top performers.

Online commodity trading

Online commodity trading offers a way for an open, many-to-many

system, where every user has equal access to price quotes and trading

functionality.

It provides a level playing field for all, without favoritism or control by a

chosen few, where any user can view all quotes posted by other users in real

time, act or trade on quotes posted by others, post their own prices and

quantities for others to trade.

The Online commodity trading site usually lists a large number of unique

products covering a variety of commodities, structures, and settlement terms

ranging from Oil, Natural Gas, Electric Power, Precious Metals, Emissions

and Weather.

33

It provides for various media ranging from Physical Delivery and

Financial Cash Settlement. There are further derivative options available

ranging from Forwards, Swaps, Options, Spreads, Differentials, Complex

Derivatives.

Liquidity, or trade activity, is perhaps the best measure of success of an

online trading commodity trading system. With most online commodity

trading systems, traders can be sure of finding an interesting market

development or trading opportunity almost every time they log on.

All quotes posted by users on any online commodity trading systems are

live and firm. They can be acted on with full assurance of a completed

transaction. The greatest advantage of an online system for trading is that

just a click can be used to hit a bid or lift an offer.

The Online trading system operates almost continuously around the

clock, 24 hours a day, seven days a week. This allows any user to extend the

trading day, and easily pass the trading objectives to others in companies in

different time’s zones.

The online commodity trading system in India is only an emerging

segment yet. This is because the Internet boom in Indian is on the rise only

now. The Internet charges are becoming minimal and the Internet is soon

becoming a way of life in India. It is in this scenario that online trading is

becoming more the way of trading in India.

34

OFFLINE COMMODITY

Commodities are more than what you think they are. Almost

everything you see around is made of what market considers commodity. A

commodity could be an article, a product or material that is bought and sold.

It could be any kind of movable property, except actionable claims, money

and securities. Commodity trade forms the backbone of world economy.

Offline commodity trading means apart from online commodity

trading, goods or things involved in buying and selling activity, those are all

the activities considered as offline commodity trading. For example retail

marketing, vegetable markets, jewel shops and so on.

Now a days banking sectors also involved in offline commodity trading.

They involved selling and buying gold from customers.

A guide for Indian Entrepreneurs to understand the business of

commodity trading

The concept of Commodity Trading is not new in India. Commodity

Trading was very much existent in earlier times in India. In fact it was one

the most vibrant forms of markets till the early 70s.

However due to numerous restrictions the Commodity Trading market

could not develop further. Recently most of these restrictions have been

removed, and therefore this allows for the development and growth of the

commodity market in India.

The usefulness of Commodity Trading in futures is that it results in

transparent and fair price discovery on account of large-scale participations

35

of entities associated with different value chains. It also reflects views and

expectations of a wider section of people who may be related to a particular

commodity.

Commodity Trading in futures also provides an effective platform for

price risk management to all the segments of players who participate in the

Commodity Trading ranging from producers, traders and processors to

Exporters/importers and end-users of a commodity.

Commodity Trading also provides hedging, trading and arbitrage

opportunities to market players.

The Forward Markets Commission (FMC) is the regulatory body for

Commodity Trading in futures/forward trade in India.

The Forward Markets Commission is responsible for regulating and

promoting futures trade in commodities.

The FMC has its headquarters in Mumbai and the regional office is

located in Kolkata.

There are some 21 commodity exchanges in India. But most of these

commodity exchanges are regional, offline and commodity specific.

Difference between online and offline stock trading?

The introduction of the Internet has surprisingly changed our way of

life as a society. It has defined the way we do business and the way we

correspond. The Internet has opened many opportunities for online trading.

36

The financial industry revolves around the Internet. Every thing is just

a few clicks away. This makes online trading most convenient. But there are

still investors who prefer the old fashion way of offline trading and they

mainly prefer offline trading for security reasons.

Internet has introduced a way for consumers to manage their money

online. Not to mention, Internet has transformed the way investment

companies operate their business and has made it easy for private investors

to gain straight access to a range of different markets and online tools that

were at one point only reserved by the use of investment professionals.

Consumer investing and online trading has dramatically changed over

the last decade. Online trading dynamically continues to be redefined.

Services have expanded to include integrated management of additional

financial accounts. Not to mention, it has subsequently expanded in

conjunction with ground-breaking improvements to the traditional trading

interface, such as telephone interface systems.

Of course, online trading has many advantages. There are several

wonderful reasons to invest online and consider online trading.

1. Money saving opportunities

The amount of money you save depends primarily on the online

brokerage firm that you choose. No two firms are the same. There may be

different regulations, similar to bank regulations. There are minimum

deposits required that must be maintained. As mentioned above, this will

depend on the online brokerage firm.

37

2. Instant online access

You can gain instant access to your account, the value of your portfolio

updates immediately before your eyes.

3. Enter online trades at anytime

You can enter online trades at anytime and from anywhere. This is

very convenient if you live in a different time zone than the country you are

trading in. Not to mention, it is especially fit for investors with busy

schedules.

4. With online trading you are in charge

You are in control of your investments. No sales pitches and no

hassle. You decide where to invest your money.

Nevertheless, with all the convenience of online trading there are still

investors who prefer the old fashion way of offline trading.

Offline trading has lost some popularity but it is still the

main form of investing. Offline trading offers many benefits as well.

1. The one benefit that an investor appreciates the most is that

they are not alone when making investment decisions.

2. There are experienced and professional brokerage companies

that handle their investments for them.

3. Investors are not faced with the challenge of making these vital

investment decisions; especially, if they do not have the

experience necessary to make the appropriate

investments.

38

4. Also, there is someone there to answer any questions that may

cause concerns.

Not to mention, with offline trading mistakes are less likely to take

place. No one wants to throw their money away or stand by and watch

someone else throw their money away. It may be wise to hire a professional

to assist you in making the correct investment decisions if you feel you lack

the knowledge necessary.

39

2. DATA ANALYSIS AND INTERPRETATION

TABLE – 1

CLASSIFICATION OF THE RESPONDENTS BASED ON AGE

Age No. Of Respondents Percentage

Below 20 6 6

21 - 30years 34 34

31 - 40years 22 22

Above 40years 38 38

Total 100 100

INFERENCE:

The above table shows that 6% of the respondents are below 20yerars.

34% of the respondents are between the age group of 21-30years. 22% of the

respondents are between the age group of 31-40years and 38% of the

respondents are above 40years.

40

TABLE - 2

CLASSSIFICATION OF THE RESPONDENTS BASED ON SEX

Sex No. Of Respondents Percentage

Male 89 89

Female 11 11

Total 100 100

INFERENCE:

The above table shows that 89% of the respondents are males and

11% of the respondents are female.

Most of the respondents (89%) are males.

CHART-2

41

TABLE – 3

CLASSIFICATION OF THE RESPONDENTS BASED ON EDUCATIONAL

QUALIFICATION

Educational status No. Of Respondents Percentage

School level 56 56

ITI 20 20

Degree 24 24

Diploma 0 0

Total 100 100

INFERENCE:

The above table shows that 56% of the respondents having school

level of education and 24% of the respondent finished their Degree courses.

CHART-3

42

TABLE – 4

CLASSIFICAATION OF THE RESPONDENTS BASED ON

EXPERIENCE

Experience in years No. Of Respondents Percentage

Below 1year 42 42

1 - 5year 29 29

6 -10year 9 9

Above 10year 20 20

Total 100 100

INFERENCE:

The above table shows that 42% of the respondents are having below

one-year experience. 29% of the respondents are having 1-5years of

experience. 9% of the respondents are having 6-10years experiences and

20%of the respondents having experience above 10years.

CHART-4

43

TABLE – 5

CLASSIFICATION OF THE RESPONDENTS BASED ON ONLINE

TRADING

Online Trading No. Of Respondents Percentage

Fully Satisfied 73 73

Satisfied 27 27

Not Satisfied 0 0

Total 100 100

INFERENCE:

The above table shows that 73% of the respondents are fully satisfied

with the online trading provided by the organization and 27% of the

respondents are satisfied with the online trading provided by the

organization.

CHART-5

44

TABLE – 6

CLASSIFICATION OF THE RESPONDENTS BASED ON OFFLINE TRADING

Offline Trading No. Of Respondents Percentage


Satisfied 66 66

Not Satisfied 0 0

Total 100 100

INFERENCE:

The above table shows that 34% of the respondents are fully

satisfied with the ventilation facility provided by the organization and 66%

of the respondents are satisfied with the ventilation facility provided by the

organization.

CHART-6

45

TABLE-7

CLASSIFICATION OF THE RESPONDENTS BASED ON

COMMODITY TRADING

Commodity Trading No. Of Respondents Percentage


Satisfied 62 62

Not Satisfied 0 0

Total 100 100

INFERENCE:


with the Commodity Trading and 62% of the respondents are satisfied with

the floor cleaning.

CHART-7

46

TABLE – 8


INTRADAY COMMISSION

Intra Day Commission No. Of Respondents Percentage


Satisfied 19 19

Not Satisfied 0 0

Total 100 100

INFERENCE:


with the Intra day commission charged by the organization and 19% of the

respondents are satisfied Intra day commission charged with the by the

organization.

CHART-8

47

TABLE – 9


DELIVERY DAY COMMISSION

Delivery Day Com mission No. Of Respondents Percentage


Satisfied 63 63

Not Satisfied 12 12

Total 100 100

INFERENCE:


with the Delivery day commission. 63% of the respondents are satisfied with

the Delivery day commission and 12% of the respondents are not satisfied

with the Delivery day commission.

48

TABLE – 10

CLASSIFICATION OF THE RESPONDENTS BASED ON CREDIT LIMIT PROVIDED BY THE COMPANY

Credit Limit No. Of Respondents Percentage


Satisfied 27 27

Not Satisfied 0 0

Total 100 100

INFERENCE:


with the Services provided by the broking company and 27% of the

respondents are satisfied with the Services provided by the broking

company. CHART-10

49

0% 20% 40% 60% 80% 100%

Fully Satisfied

Satisfied

Not Satisfied

CLASSIFICATION OF THE RESPONDENTS BASED ON CREDIT LIMIT

No. Of Respondents

Percentage

TABLE - 11

CLASSIFICATION OF THE RESPONDENTS BASED ON WHAT

THEY LIKE MOST WHETHER ONLINE OR OFFLINE TRADING

Most Like No. Of Respondents Percentage

Online Trading 76 76

Offline Trading 24 24

Not Interested 0 0

Total 100 100

INFERENCE:

The above table shows that 76% of the respondents are fully

interested to do the online trading. 24% of the respondents are interested in

offline trading.

CHART-11

50

TABLE - 12

CLASSIFICATION OF THE RESPONDENTS BASED ON ONLINE

COMMODITY

Online Commodity No. Of Respondents Percentage


Satisfied 36 36

Not Satisfied 0 0

Total 100 100

INFERENCE:


with the online commodity and 36% of the respondents are satisfied with the

online commodity.

CHART-12

51

TABLE - 13

CLASSIFICATION OF THE RESPONDENTS BASED ON OFFLINE

COMMODITY

Offline Commodity No. Of Respondents Percentage


Satisfied 76 76

Not Satisfied 0 0

Total 100 100

INFERENCE:


with the offline commodity and 76% of the respondents are satisfied with

the offline commodity.

CHART-13

52

TABLE-14

CLASSIFICATION OF THE RESPONDENTS BASED ON EXPECTATIONS OF

OTHER FACILITTIES.

Expectation Of Other Facilities No. Of Respondents Percentage


Satisfied 83 83

Not Satisfied 0 0

Total 100 100

INFERENCE:

The above table shows that 17% of the respondents are expecting

some other facilities from management and 83%of the respondents are not

expecting any other facilities.

CHART 14

53

FINDINGS OF THE STUDY

84% of the respondents are males.

73% of the respondents are highly satisfied with online trading.

65% of the respondents are not satisfied with offline trading.

71 of the respondent are satisfied with in trading day commission.

30% of the respondent is highly satisfied regarding credit limit

allowed by the company.

27% of the respondents are highly satisfied with risk and return.

54

SUGGESTIONS

Even though, online trading is better than offline trading. Still it is

difficult for the traders to trade.

Many of our farmers tack in educational, therefore tack of knowledge

of market and exchanges. So there is a need to educate them in order to

participating in these markets to take the advantages of hedging again their

agricultural products.

Online trading do away from the more of intermediaries which is

farmer and must benefit to farmers.

Many company’s yet in to retail trading in big way. Volume of trading

is yet to be positive and which would pay way to better price discovery

mechanisms.

Online trading links farmers to consumers therefore resultors in better

realizations .

Offline line trading exeses customers to risk of credit defaults delay in

payments, and also delay of commodity dermises.

55

CONCLUSION

TO my understanding the best of my knowledge with the help of my

study at “ANGEL BROKING”, there by conclude my study saying that

online trading is better in many terms than offline trading and will flourish

in the future.

56

REFERENCE

www.commodity trading.com.

www.nseindia.comm.

www.money control.com.

57

http://www.money/

http://www.nseindia.comm/

http://www.commodity/

a study on compariion of online with offline trading in commodities

Documents