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Commodity futures as a risk reduction and investment instrument

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indian project
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58 pages
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  1. Introduction
  2. Definition of Indian financial system
  3. Types of Indian financial system
    1. Organized sector
    2. Unorganized sector
  4. Securities and exchange board of India (SEBI)
  5. SEBI guidelines for commodity futures trading
  6. Regulatory framework in India
  7. Types of futures contracts
  8. History of trading
  9. Growth of commodity futures in India
  10. Role of exchange in futures trading
  11. Functions of futures markets
    1. Price discovery
    2. Speculation
    3. Hedging
  12. Reseach design
    1. Objective of the study
    2. Scope of the study
  13. Methodology of the research
  14. Findings and interpretations
  15. Bibliography
  16. Conclusion

The Indian financial system consists of many institutions, instruments and markets. Financial instruments range from the common coins, currency notes and cheques, to the more exotic futures swaps of high finance. The regulatory institutions are the ones, which form the regulations, and control the Indian financial system. The Reserve Bank of India is the regulatory body, which regulates, guides controls and promotes the IFS. Financial intermediaries are the intermediaries who intermediate between the saver and investors. They lend money as well as mobilizing savings; their liabilities are towards ultimate savers, while their assets are from the investors or borrowers. Some Non-Banking institutions also act as intermediaries, and when they do so they are known as Non-Banking Financial Intermediaries. UTI, LIC, GIC & NABARD are some of the NBFC's in India. Non-intermediaries institutions do give loans but their resources are not directly obtained from the saver.

[...] Commodity investments are always considered as defensive because during the times of inflation, which adversely affects the performance of stocks and bonds, commodities provide a defense to investors, maintaining the performance of their portfolios. Commodity markets have a huge potential in the Indian context particularly because of the agro-based economy. With the government's initiative for agricultural liberalization, commodities' trading in India has gained increased momentum in activities. To increase the efficiency of the markets the Forward Markets Commission the governing body of commodities trading in India has taken several initiatives for the establishment of national level multi-commodity exchanges in India. [...]


[...] Thus from all the above conclusions of the sub-objectives, it can be concluded, ?commodity futures can be used as a risk reduction and a sound investment instrument? Recommendations Since commodity futures are a new concept, more awareness must be created by marketing this investment instrument appropriately. The people who have already invested in commodity futures, to recommend their friends and family to invest here too, can create this awareness. If the minimum investment is reduced, this might induce more people to invest in commodity futures. [...]


[...] Through this, project, an attempt is made to prove that commodity futures can be used effectively as a risk reduction instrument and also as a very good investment opportunity. Statement of the problem Studying the commodity market as an investment option and coming know about its awareness. Commodity Future is a very important instrument in hedging risks, which arises in the spot market. Speculators and hedgers use Commodity Futures to reduce the risks. The spot prices so determined, may not be profitable to the person who is dealing with that particular commodity. [...]

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