Equity Commodity Investment

“A COMPARATIVE STUDY BETWEEN EQUITY & COMMODITY INVESTMENT OPTION”

ABSTRACT

India, a commodity based economy where two-third of the one billion population depends on agricultural commodities, surprisingly has an under developed commodity market. Unlike the physical market, futures markets trades in commodity are largely used as risk management (hedging) mechanism on either physical commodity itself or open positions in commodity stock. For instance, a jeweller can hedge his inventory against perceived short-term downturn in gold prices by going short in the future markets.

The study aims to know how of the commodities market and how the commodities traded on the exchange. The idea is to understand the importance of commodity derivatives and learn about the market from Indian point of view. In fact it was one of the most vibrant markets till early 70s. Its development and growth was shunted due to numerous restrictions earlier. Now, with most of these restrictions being removed, there is tremendous potential for growth of this market in the country.

ACKNOWLEDGEMENT

SYNOPSIS FOR THESIS

DESIRED AREA

Investments – Commodity Market in India

TITLE OF THE THESIS

Comparative Study between Equity & Commodity Investment Options”

PROBLEM DEFINITION / HYPOTHESIS / RESEARCH OBJECTIVE

• To have a comparative study between two major Investments options – Equity & Commodity on the basis of their returns.

• To study simple properties of commodity futures as an asset class and analyze the hedging properties

• To understand the possible returns by investing in Commodity Futures when the Commodity Spot Prices are falling and comparing them with those in Stocks and Bonds.