volatility of commodity trading market in … in march 2012 for future trading due to sharp rise in...

Asian Journal of Business Management & Development Research: A peer Review Quarterly Online Journal

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VOLATILITY OF COMMODITY TRADING MARKET IN

INDIA

AVINASH JHA

DEPT. OF ECONOMICS COLLEGE OF MANAGEMENT

AGRA (U.P.) ABSTRACT

For the present study, one agricultural commodity has been selected due to

higher volume. Earlier this commodity was banned by Forwards Market

Commission in March 2012 for future trading due to sharp rise in prices but

now future contracts of Guarseed has relaunched for trading from May 2013

onwards.

INTRODUCTION

RESEARCH METHODOLOGY

Research Methodology is the process which is used to collect data from various

sources for making decisions. There are mainly four major National Level

Exchanges in India namely NMCE, NBOT, NCDEX and MCX but NCDEX is

selected for the study because volume of selected commodity is traded greater

than traded on other exchanges. The research design for this study is analytical

in nature based on available secondary data. Secondary data is collected from

other researches, periodicals, magazines, news papers, journals and Internet by

the researcher. Secondary data on daily futures prices and volume of trade on

exchanges is collected from the official web site of NCDEX for the period from


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14 May 2013 to 19July 2013. Observations of volume and future price of the

commodity is taken for July 2013 contract as FMC allowed future trading in

Guarseed from May 2013 onwards.

PROBLEM STATEMENT

For the present study, one agricultural commodity Guarseed has been selected

due to higher volume.Earlier this commodity was banned by Forwards Market

Commission in March 2012 for future trading due to sharp rise in prices but

now future contracts of Guarseed has relaunched for trading from May 2013

onwards.

TOOLS & TECHNIQUES

Concurrent deviation method and correlation coefficient are used for analyzing

the collected data.

DATA ANALYSIS & INTERPRETATION

Following table shows the data of volume, future close prices and spot prices of

Guarseed for July future contract. Time period has been taken from 14 May

2013 to 19 July 2013 for two months for analyzing the correlation between

future prices and volume, future and spot prices as well as impact of Guarseed

future prices on traded volume by applying concurrent deviation method and

correlation coefficient respectively.

Table No.1 : Future Closing prices and volume of Guarseed for July 2013

Contract


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CONCLUSION

On the basis of above study, we conclude that price fluctuations do not have any

impact on traded volume. Future prices are dependent upon current demand and

supply of Guarseed in various mandis. According to market conditions, spot and

future prices of agricultural commodities varies. It has also been shown in the

results that spot and future prices of selected agricultural commodity moves in

the same direction considering the physical stocks.

REFERENCES

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