Finance Project

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SUMMER INTERNSHIP PROGRAM

A REPORT ON

COMMODITY FUTURES: A HEDGING TOOL

BY

HEMALI LATHIA
&
DEEPIKA BAJORIA

A report submitted in partial fulfillment of the requirements of

MBA Program of

Amity Global Business School

ACKNOWLEDGEMENT

First of all I would like to thank Mr.Chetan Kumar, branch Manager Religare Securities Ltd., Bokaro branch who gave me a chance to do my project in his reputed branch.

I would also like to thank Mr.Binay Kumar, Manager Commodity, Religare Securities Ltd, Bokaro branch under whom I was doing my project and without his guidance this project wouldn’t have been possible. He always motivated me to put my best foot forward by setting high standards. Hence this project is a testament to the desire for gaining knowledge that he has ignited in me.

I would also like to thank Mr.Ajay Kumar and Mr.Himanshu who were always there to help me in making this project and imparting lots of knowledge regarding the market.

Finally I would like to thank all the people who gave their precious time to respond to the questionnaires and hence helped me gaining valuable information and complete the survey successfully.

TABLE OF CONTENTS

Abstract
1. Introduction…………………………………………….………………………. 1. About the Company…………………………………… 2. Future Contract……………………………………….. 3. Spot Verses Future Contract…………………………. 4. Participants in Derivative Market…………………….. 5. Commodity Market……………………………………. 6. Difference between Commodity and Financial Market………. 7. Advantage to participants in the commodity futures market…….. 8. Indian scenario………………………………………………….. 9. Major Exchanges in India……………………………………….. 1.10 Commodities traded in India………………………………….. 1.11 Regulating Body………………………………………………… 1.12 Global Commodity Exchanges………………………………….. 1.13 Price Discovery………………………………………………….. 1.14 Commodity Futures: A hedging tool……………………………. 2. Exploring the real world……………………………………………. 3. Whether Commodity Exchange In India Should Be Banned Or Not???............ 3.1 Introduction………………………………… 3.2 Objective……………………………………. 3.3 Assumption…………………………………. 3.4 Methodology………………………………… 3.5 Analysis of the Responses……………………. 3.6 Relative changes in the prices of commodities before and after listing in the exchange 3.7 Analysis of the responses of broking houses……….. 3.8 Percentage of bullions traded in MCX…………………. 3.9 A study of developed commodity exchange (NYMEX)……… 3.10 Findings of the research……………………………………… 3.11 Conclusion……………………………………………………. 3.12 Limitations of the study………………………………….. 4. Comparison of the trading account facility provided by various broking houses………… 4.1 Introduction…………………………………………. 4.2 Objective……………………………………………. 4.3 Methodology………………………………………. 4.4 Analysis and Interpretation……………………….. 4.4.1 Analysis of the responses………………….. 4.4.2 Comparative study of various broking houses (Equity-Online)… 4.5 Findings from the research…………………….. 4.6 Conclusion………………………………………. 4.7 Limitations of the study………………………… 5. Fundamental Analysis on Steel Sector……………………………………… 5.1 Introduction………………………….

5.2 Factors influencing the price of steel…………… 5.3 Methodology…………………………………….. 5.4 Future Analysis………………………………….. 5.4.1 Demand Forecast………………………….. 5.4.2 Production Forecast……………………….. 5.4.3 Demand-Supply Mismatch………………..

5.4.4 Soaring raw material prices to push the steel price up……… 5.4.5 Government Measures………………………………………. 5.5 Correlation Coefficient…………………………………………… 5.5.1 Steel and Crude Oil………………………………………….. 5.5.2 Steel and Stock Price………………………………………… 5.5.3 Steel and Interest Rate……………………………………….. 5.5.3 Steel and Unemployment Rate...
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