India agri commodity study

A study on commodity markets in India with reference to agricultural
products
EXECUTIVE SUMMARY
A dissertation study titled A STUDY ON COMMODITY MARKETS IN INDIA WITH
REFERENCE TO AGRICULTURAL PRODUCTS has been submitted to Bangalore University
as a part of curriculum for the partial completion of Master of Business Administration.
The main objectives of the dissertation study includes,
To study the present scenario of the commodity markets.

To understand the method of pricing agricultural commodity futures.
To understand hedging, speculation and arbitrage in commodity futures.
To analyze agricultural commodities by using technical analysis.
All information relevant to the project has been drawn from both primary and secondary sources:
Primary sources: This includes personal interviews conducted with the professionals in the
field.
Secondary sources: Constitutes various books, journals, publications, web sites etc.
The commodity markets are emerging markets in India compared to equity and debt markets.
The commodity markets in India are said to be still in nascent phase. But the volume of trading
and the number of participants are increasing year over year. India is among the top 5 producers
of most of the commodities, in addition to being a major consumer of bullion and energy
products. Agriculture contributes about 22% to the GDP of the Indian economy. It employs
around 57% of the labor force on a total of 163 million hectares of land. Agriculture sector is an
important factor in achieving a GDP growth of 8%. All this indicates that India can be promoted
as a major center for trading of commodity derivatives. Therefore there is a need to study the
commodity markets.
The instruments available for trading in the commodity markets are the forwards, the futures
and the options. The forward contracts are mainly traded over the counter. The forwards
contracts are tailor made contracts, they can be negotiated where as the futures are standardized
contracts. They are traded only on the standardized exchanges. The case of options contracts on
commodities is different, they were banned in the year 1952. Therefore the options are not
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studied in detail. The study mainly focuses on the commodity futures. The study analyses four
agricultural products like Chana, Maize, Soybean and Turmeric. The study mainly focuses on the
present scenario of these commodities and the market influencing factors. The study provides an
outline in which the commodity futures are priced by using the cost of carry model and the
arbitrage arguments.
The research gives a brief description about the national commodity exchanges in India, their
management, capital structure and the trading system adopted by them. Though the trading
system of all the exchanges is more or less the same, they have some differences in the procedure
of trading and settlement. The study gives an outline of the evolution of the commodity markets
in India under three periods. Namely, the pre-independence period, the post-independence period
and the post-liberalization period. The study focuses on the structure of the commodity markets
and their regulations within Indian framework. The Indian commodity markets have three tier
regulations. First the central Government, second the FMC and the Exchanges at third tier. The
study looks into the trends in the commodity markets.
There are various tools available to track the movements of commodity markets. The study
focuses on the technical analysis. The technical tools like Line chart, Simple moving average,
the ROC, RSI and Support and Resistance lines are used to analyze the agricultural commodities.
Chapter I
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Introduction
Commodity
In general, a commodity can be defined as any product that can be used for commerce or an
article of commerce, which is traded on an authorized commodity exchange. In business terms, a
commodity can be defined as an undifferentiated product, whose market value arises from the
owners right to sell rather than use.
The Indian Forward Contracts (Regulation) Act (FCRA), 1952 defines goods as every kind
of movable property other than actionable claims, money and securities. In current situation all
goods and products of agricultural (including plantation), mineral and fossil origin are allowed
for commodity trading recognized under FCRA. The national commodity exchanges, recognized
by the central government, permits commodities which includes precious (gold and silver) and
non ferrous metals, cereals and pulses, ginned and unginned cotton, oil seeds, oils and oil cakes,
raw jute and jute goods, sugar and gur, potatoes and onions, coffee and tea, rubber and spices etc.
Commodity derivatives market

Commodity derivatives market trade contracts for which the underlying asset is commodity. It
can be an agricultural commodity like wheat, soybean, rapeseed, cotton, etc or precious metals
like gold, silver, etc
Commodity Exchange
A commodity Exchange is an association, or a company of any other body corporate
organizing futures trading in commodities. In a wider sense, it is taken to include any organized
market place where trade is routed through one mechanism, allowing effective competition
among buyers and among sellers this would include auction-type exchanges, but not wholesale
markets, where trade is localized, but effectively takes place through many non-related
individual transactions between different permutations of buyers and sellers.
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Forward contracts
A forward contract can be studied in contrast with a spot contract. A spot contract, is an
agreement to buy or sell an asset today where as a Forward Contract is particularly a simple
derivative, which is an agreement to buy or sell an asset at a certain future time for a certain
price. A forward contract is traded in the over-the-counter marketusually between two
financial institutions or between a financial institution and one of its clients.
One of the parties to a forward contract assumes a long position and agrees to buy the
underlying asset on a certain specified future date for a certain specified price. The other party
assumes a short position and agrees to sell the asset on the same date for the same price. Forward
contracts on foreign exchange are very popular. Most large banks have a "forward desk" within
their foreign exchange trading room that is devoted to the trading of forwards.
The features of a forward contract

The forward contracts are tailor made. It means the terms and conditions are negotiated
between buyers and sellers.

There are no secondary markets for forward contracts.
Forward contracts generally end with deliveries.
Usually no collateral is required for a forward contract.
Forward contracts are settled on the maturity date, no market to market settlement.
In a forward contract, both the parties have credit risk.
Payoffs
The payoff is the gain or loss arising out of a forward contract during the maturity of the
contract. It is important to distinguish between the contract price and spot price to understand the
payoffs. The contract price is the market price that would be agreed to today for delivery of the
asset at a specified maturity date. The spot price is todays market price.
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When Spot price exceeds Contract price: Buyers Gain = Spot price Contract price
Sellers Loss = Contract price Spot price
When Contract price exceeds Spot price:Buyers Loss = Contract price Spot price
Sellers gain = Spot price Contract price
Commodity Futures
Futures markets have been described as continuous auction markets and as clearing houses for
the latest information about supply and demand. They are the meeting places of buyers and
sellers of an ever-expanding list of commodities that today includes agricultural products, metals,
petroleum, financial instruments, foreign currencies and stock indexes. Trading has also been
initiated in options on futures contracts, enabling option buyers to participate in futures markets
with known risks.
A futures contract is a standardized forward contract. A futures contract is an agreement
between two parties to buy or sell an asset at a certain time in the future for a certain price.
Unlike forward contracts, futures contracts are normally traded on an exchange. To make trading
possible, the exchange specifies certain standardized features of the contract. As the two parties
to the contract do not necessarily know each other, the exchange also provides a mechanism that
gives the two parties a guarantee that the contract will be honored.
The futures contracts are guaranteed for performance. That is the party involved in such a
contract need not worry about credit worthiness of other party. The future contracts are
standardized contracts developed by Future Exchanges. The exchanges should specify the details
about the nature of agreement between the buyer and seller. The exchange should specify the
underlying asset, contract size, time and place of delivery, quotation of prices.
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Features of a futures contract

The future contracts are traded only on standardized stock exchanges.
The contracts are standardized. The terms and conditions are framed by the
exchanges.
The futures are usually settled in cash.
The settlement takes place on Market to market basis.
The contracts mature on last Thursday of every month.
Margins
The futures market procedure is the system of collateral margins that has evolved as a means
to reduce risk of default. As opposed to margins or stock accounts, a futures margin payment is
not a form of down payment on the balance due since a futures transaction is not an investment
of initial capital in return for a later payoff, but rather, in its purest form, is an agreement made at
no initial investment.
The parties in a futures contract has to maintain two types of margins namely, Initial margin
and Maintenance margin. Initial margin is the margin where the buyers and the sellers in a
futures contract at the time of entering into the contract are required to deposit on the futures
contract value. The initial margin will be usually 5 to 10 percentage of the futures contract value.
The Exchange and Clearinghouse determines the exact amount of margin.
After the initial margin is deposited, a change in the price of future contract would change the
percentage relationship between margin and contract value. At the end of each trading day, the
margin account is adjusted to reflect the investors gain or loss by Marking to Market basis.
Sometimes in the margin account of the investors, it is possible that the margin may be very low
or it can be wiped out of balance. To prevent this kind of situation the investor is required to
ensure the margin which is called Maintenance margin. It is typically 3/4th of initial margin.
Once the margin account falls below 3/4 th of initial margin, the investor gets a margin call from
broker. The investor should top up his margin account. If the call is ignored, the future contract
ceases to exist.
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Market to Market basis

The futures contracts are marked to market on a periodic basis. This means that the future
contract prices shall be adjusted to the market price of the underlying asset. If the spot market
price increases, the buyers margin account shall be credited and the sellers margin account shall
be debited. If the spot market price decreases, the buyers account shall be debited and the
sellers account shall be credited.
The spot market price of the underlying asset at the end of the trading day shall be taken as
the new future contract price. It is known as marking to market price. That is, any change in the
spot market price henceforth will affect the margin of investors. Consider table 1.1 to understand
the working of margins and market to market.
Table 1.1
To illustrate the operation of market to market and margins, let us consider the following
example of a wheat futures contract
Day
Future price
Gain/loss (Rs/lot)
(Rs/qntl)
Margin account
Margin call
balance (Rs/lot)
Long
Short
11000.00 11000.00
(Rs/lot)
Long
Short
-
March 1
1100.00
Long
-
Short
-
March 2
1100.10
1000.00
(1000.00)
12000.00
10000.00
March 3
1100.30
2000.00
(2000.00)
14000.00
8000.00
250.00
March 4
1099.80
(5000.00)
5000.00
9000.00
13000.00
March 5
1099.60
(2000.00)
2000.00
7000.00
15000.00
1250.00
March 6
1099.70
1000.00
(1000.00)
9250.00
14000.00
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On March 1st, a wheat future contract has been framed. The contract size is 10MT and
the price of wheat was Rs.1100 per quintal.

The initial margin is assumed to be 10% of futures contract value and the maintenance
margin is assumed to be 3/4th of initial margin.

While entering into the contract, both the positions, the long and the short has to deposit
an initial margin of Rs.11000 which is 10 percentage of future value.
On march 3rd when the future value raised from Rs.1100.10 to Rs.1100.30, the long gains
Rs.2000 and the short loses Rs.2000 due to which the shorts margin account balance
falls below the maintenance margin and the margin call for Rs.250 is made.
Similarly on May 5th, the spot price of the wheat declines from Rs.1099.80 to Rs.1099.60.
Now the long loses Rs.2000 due to which his margin account fell down below
maintenance margin and receives a margin call for Rs.1250.
Pricing of commodity futures.

In the futures markets the free flow of information is vital. Futures exchanges act as a focal
point for the collection and dissemination of statistics on supplies, transportation, storage,
purchases, exports, imports, currency values, interest rates and other pertinent information. Any
significant change in this data is immediately reflected in the trading pits as traders digest the
new information and adjust their bids and offers accordingly. As a result of this free flow of
information, the market determines the best estimate of today and tomorrows prices and it is
considered to be the accurate reflection of the supply and demand for the underlying commodity.
Price discovery facilitates this free flow of information, which is vital to the effective functioning
of futures market.
The fair value of a future contract can be arrived by using the arbitrage argument. The buyer
who needs an asset in the future has the choice between buying the underlying asset today in the
spot market and holding it, or buying it in the forward market. If he buys it in the spot market
today, it involves opportunity costs. He incurs the cash outlay for buying the asset and he also
incurs costs for storing it. If instead he buys the asset in the forward market, he does not incur an
initial outlay. However the costs of holding the asset are now incurred by the seller of the
forward contract who charges the buyer a price that is higher than the price of the asset in the
spot market.
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This arbitrage argument forms the basis for the costofcarry model where the price of the
futures contract is defined as:
F=S+C
Where: F = Futures Price
S = Spot Price
C = Holding cost / Carrying Costs.
Pricing futures contracts on investment commodities
Where: r is Cost of financing (Annualized)

T is Time till expiration
U is Present value of all storage costs.
Pricing futures contracts on consumption commodities.
Where: r is Cost of financing (Annualized)

T is Time till expiration
U is Present value of all storage costs.
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Futures Payoffs
Futures contracts have linear payoffs. It means that the losses as well as profits for the buyer
and the seller of a futures contract are Unlimited.
Payoff for the buyer of futures.

The payoff for a person who buys a futures contract is similar to the payoff for a person who
holds an asset. He has a potentially unlimited upside as well as a potentially unlimited downside.
Profit
Loss
For illustration, consider an example, a person has bought a three-months future contract on
gold for Rs.16300. If the price of the gold in the spot market goes up from Rs.16300 to
Rs.16310, the buyer gains Rs. 10 for 10 gms. The gain continues until the spot market price
increases. If the price of the gold decreases from Rs.16300 to Rs. 16290, the buyer loses Rs. 10
for 10gms. The loss continues until the spot market price decreases. Therefore the gain or loss is
unlimited.
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Payoff for the seller of futures contract.

The payoff for a person who sells a futures contract is similar to the payoff for a person who
shorts an asset. He has a potentially unlimited upside as well as a potentially unlimited downside.
Profit
Loss
To illustrate consider the same example given above. A person has sold a three month futures
contract on gold for Rs. 16300. If the price of the gold falls down from Rs. 16300 to Rs. 16290,
the seller gains Rs. 10 for 10gms. The gain continues until the spot market price falls. In contrast,
if the spot market price increases from Rs. 16300 to Rs. 16310, the seller loses Rs. 10 for 10gms.
The loss continues until the spot market price increases.
Therefore it is said that the profits and gains in a futures contract are unlimited. The buyer
continues to gain to the extent to which the spot market price increases or continues to lose to the
extent to which the spot market price decreases.
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Commodity options
A commodity option is the right (not an obligation) to buy or sell a fixed quantity of a
commodity at a particular date, or within a specified period, and at a fixed price, called exercise
price or strike price. The options can be traded both on OTC and exchanges. The holder will only
exercise his option, if the price of the underlying commodity moves favorably, by an amount
sufficient to provide a profit when the option is sold. If the price moves in the opposite direction,
only the price for the option (called premium) is lost. The option price is therefore a kind of
insurance premium. The seller of the option is correspondingly more exposed to risk.
Options, as well as futures, enable users and producers to hedge against the risk of wide price
fluctuations. However, they also allow speculators to gamble for large profits with limited
liability. Therefore the range of users is diverse: a speculator may buy coffee call options in the
expectation that unseasonable weather in Brazil will drive up world coffee price, or, an airline
may hedge its fuel requirements with kerosene calls.
Kinds of options:
European-style options can only be exercised on the expiry date, whereas American-style
options can be exercised at any time between the date of purchase and the expiration date.
European-style options are therefore cheaper, but most exchange-traded options are of Americanstyle.
Types of options
The call option is a type of option contract where the option holder has the right to buy the
underlying asset for an exercise price on or before the date of maturity. The put option is a type
of option contract where the option holder has the right to sell the underlying asset for an
exercise price on or before the date of maturity.
However the commodity options are not traded in India, they were banned in the year 1952.
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Introduction to hedging, arbitrage and speculation in commodity futures.

Hedging
Many of the participants in futures markets are hedgers. Their aim is to use futures markets to
reduce a particular risk that they face. This risk might relate to the price of oil, a foreign
exchange rate, the level of the stock market, or some other variable. Hedgers could be
government institutions, private corporations like financial institutions, trading companies and
even other participants in the value chain. For instance farmers, extractors, ginners, processors
etc., those are influenced by the commodity prices.
Types of hedging
The short hedge is a hedge that involves a short position in futures contracts. A short hedge is
appropriate when the hedger already owns an asset and expects to sell it at some time in the
future. The long hedge involves taking a long position in a futures contract. A long hedge is
appropriate when a company knows it will have to purchase a certain asset in the future and
wants to lock in a price now.
Arbitrage
Arbitrage denotes the purchase and simultaneous sale of the same commodity in different
commodity markets in order to take advantage of differences in commodity prices between the
two markets. Such a transfer of funds is risk-free, because an arbitrageur will only switch from
one market to another if prices in both markets are known and if the profit outweighs the costs of
the operation. Opportunities for arbitrage tend to be self-correcting, due to the increased demand
for the commodity, there is an upward pressure on its price in the market where it is bought,
whereas the increased supply in the market where it is sold results in a downward price
movement.
Speculation
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Speculation refers to anticipating the movement of prices of a commodity for a future period.
The anticipated movement may be a rise or a fall in the prices. Speculators are individuals and
firms who seek to profit from anticipated increases or decreases in futures prices. In so doing,
they help provide the risk capital needed to facilitate hedging.
Introduction to agricultural commodities.

The origin of agricultural commodity derivatives can be traced back to the need of farmers to
protect themselves against fluctuations in the price of their crop. From the time it was sown to
the time it was ready for harvest, farmers would face price uncertainty. Through the use of
simple derivative products, it was possible for the farmer to partially or fully transfer price risks
by locking-in asset prices. These were simple contracts developed to meet the needs of farmers
and were basically a means of reducing risk.
A farmer who sowed his crop in June faced uncertainty over the price he would receive for his
harvest in September. In years of scarcity, he would probably obtain attractive prices. However,
during times of over supply, he would have to dispose off his harvest at a very low price. Clearly
this would mean that the farmer and his family were exposed to a high risk of price uncertainty.
On the other hand, a merchant with an ongoing requirement of grains too would face a price
risk that of having to pay exorbitant prices during dearth, although favorable prices could be
obtained during periods of oversupply. Under such circumstances, it clearly made sense for the
farmer and the merchant to come together and enter into a contract where by the price of the
grain to be delivered in September could be decided earlier. What they would negotiate happened
to be a futures-type contract which would enable both parties to eliminate the price risk.
The exchanges trades a number of agricultural commodities, among them four products are taken
for analysis. They are: Chana
Maize
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Soy bean
Turmeric
A brief introduction of the above products is given below: Chana.

Chana belongs to the family of chickpea. Chana is the rabi crop and is cultivated form
November - December to February March. Chana is the largest produced pulse in the world
with a share of 50 percentages approximately. India is the largest producer and consumer of
Chana in the world.
Present scenario.
Indias Chana production fluctuates between 5.5 to 7.5 million tons. The chart showing
the production of Chana over the years is as follows.
The state wise contribution of Chana is as follows.
Indian Chana markets are highly fragmented, with long value chain. The major value
chains are commission agents, brokers, stockiest, whole sale traders, dal mills and retail
outlets. The information flow between these participants is restricted and very slow.
Market influencing factors.
Weather plays a significant role in influencing the sentiments of the traders, and these
sentiments have propounded impact on futures price.
The price of the other major pulses affects the price of Chana.
Price and yield of corresponding cash crops grown at the same time influence the supply.
Maize
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Maize is one of the most important cereals of the world and provides more human food than
any other cereal. Maize is of American origin having been domesticated about 7000 years ago.
Maize provides nutrients for humans and animals and serves as a basic raw material for the
production of starch, oil and protein, alcoholic beverages, food sweeteners and, more recently,
fuel. Maize crop is grown in warm weather condition and it is grown in wide range of climatic
conditions. About 85% of the total acreage under maize is grown during monsoon because of the
fact that the crop stops growing if the night temperature falls below 15.60 C or 600 F.
Present scenario.
India is the fifth largest producer of maize in the world contributing 3% of the global
production.
Indias maize production has increased to more than 15 million tons today.
If we examine the production over the years, maize production in India is remained
almost stagnant with constant yield levels despite rise in acreage.
The area brought under maize in India was 35.22 lakh hectares up from 27.36 lakh
hectares planted during the corresponding period last year.
Market influencing factors.

Monsoon plays a significant role in influencing the sentiments of the traders, and these
sentiments have propounded impact on futures price.
The EXIM policy of the Government regarding the maize affects the price changes.
Soybean
Soybean is the most economically important bean in the world. It is native of eastern Asia.
Soy meal is the worlds most important vegetable protein feed source accounting nearly 65% of
the world protein feed demand. About 98% of soy meal is used as an animal feed ingredient,
with the remainder used in human foods such as bakery ingredients and meat substitutes.
Soybeans, on crushing and solvent extraction, yield 17 18% soy oil and 82 83% soy meal.
About 85% of the global soy bean production is crushed.
Present scenario
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India produces 6 7 million tonnes of beans, 1 million tonne of oil, and 4 5 million
tones of soy meal in a normal year.
Madhya Pradesh, Maharashtra, and Rajasthan are the major producers of Soy bean in
India.
There are no imports of soybean into India as it is feasible to import oil. With imports, the
total soybean oil availability in the country is around 2.8 million tons.
Factors influencing the market

Since growing areas are rain-dependent, the erratic monsoon affects the production and
quality to a large extent.
The area planted is determined by the price of soybean against that of the competitive
crops: maize, jowar, and bajra.
The international price movement and the futures market at CBOT are the major
international reference markets. The government support prices play an important role.
The market is also affected by the crush margin among meal, oil, and seed.
Turmeric
Turmeric is a very important spice in India from ancient times. Turmeric, basically a tropical
plant of ginger family is the rhizome or underground stem, with a rough, segmented skin.
India produces nearly whole worlds turmeric crop and consume 80% of it. With its inherent
qualities, Indian turmeric is considered the best in the world. The fresh spice is much preferred to
the dried in South East Asia, the fresh rhizome is grated and added to curry dishes; it is also used
as yellow curry paste in Thailand. Due to Indian influence, turmeric has also made its way to the
cuisine of Ethiopia. Besides flavoring food, to purify the blood and purify the blood and remedy
skin conditions is the most common use of turmeric in Ayurveda.
Present scenario.
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India is the largest producer of turmeric in the world. Its production accounts for nearly
90% 0f the worlds turmeric production.
India is the largest exporter of turmeric in the world.
Tamil Nadu is the largest producer of turmeric in the country. Its production accounts for
nearly 18% followed by Orissa.
Market influencing factors

The international price movement and the futures market at CBOT are the major
international reference markets. The government support prices play an important role.
Price and yield of corresponding cash crops grown at the same time influence the supply
Technical analysis in commodity markets.

Technical analysis involves a study of market-generated data like prices and volumes to
determine the future direction of price movements. Simply put, technical analysis is the study of
prices, with charts being the primary tool. The roots of modern-day technical analysis stem from
the Dow theory developed around 1900 by Charles Dow. Stemming either directly or indirectly
from the Dow Theory, these roots include such principles as the trending nature of prices, prices
discounting all known information, confirmation and divergence, volume mirroring changes in
price, and support/resistance. And of course, the widely followed Dow Jones Industrial Average
is a direct offspring of the Dow Theory.
Technical analysts, called "chartists", may employ models and trading rules based on price
and volume transformations, such as the relative strength index, moving averages, regressions,
inter-market and intra-market price correlations, cycles or, classically, through recognition of
chart patterns.
Technical analysis stands in distinction to fundamental analysis. Technical analysis "ignores"
the actual nature of the company, market, currency or commodity and is based solely on "the
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charts," that is to say price and volume information, whereas fundamental analysis does look at
the actual facts of the company, market, currency or commodity. The fundamental analysts
believe that the market is 90 percentage logical and 10 percentage psychological. The technical
analysts believe that it is 90 percentage psychological and 10 percentage logical. Technical
analysts dont evaluate a large number of fundamental factors relating to the company or a
commodity or economy. Instead they analyze internal market data with the help of charts and
graphs.
Assumptions
The Market Discounts Everything
Price Moves in Trends
History Tends To Repeat Itself
Market value of a scrip is determined by the demand and supply.
Technical tools
There are various technical tools used by the technical analysts to determine movement of the
markets. Some of those are: Line charts
Simple Moving Average Analysis
Relative Strength Index (RSI):
Rate of Change (ROC)
Support and Resistance Level
A brief description of the above techniques is as follows: -
Line charts
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A line chart shows the line connecting successive closing prices. Technical analysts believe
that certain formations or patterns observed on the line chart have predictive value. The more
important formations and their indications are: Head and shoulders top representing a bearish development.
Inverse Head and Shoulders Top reflecting the bullish development.
Triangle or Coil Formation represents the pattern of uncertainty.
Flags and Pennants Formation signifies a pause after which the previous price trend is
likely to continue.
Double top formation represents a bearish development, signaling that the price is
expected to fall.
Double bottom formation reflects a bullish development, signaling that the price is
expected to rise.
Simple Moving Average Analysis

Moving average is one of the oldest and most popular technical analysis tools. A moving
average is the average price of a share over a given time. It is not a single number, but it is a set
of numbers, each of which is the average of the corresponding subset of a larger set of data
points.
A simple moving average is calculated by adding the share prices of the most recent n time
periods and then dividing by n. For instance, adding the closing prices of a share for most
recent 10 days and then dividing by 10. When calculating successive values, a new value comes
into the sum and an old value drops out.
p + p1+ p2 + p3 + p4 +p5 + p6 + p7 +p8 + p9
SMA =
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10
Cues to sell
Stock price line falls through the moving average line when the graph of the moving
average line is flattening out.
Stock price line rises above the moving average line which is falling.
Stock price line, which is below the moving average line, rises but begins to fall again
before reaching the moving average line.
Cues to buy
Stock price line rises through the moving average line when the graph of the moving
average line is flattening out.
Stock price line falls below the moving average line, which is rising.
Stock price line, which is above the moving average line, falls but begins to rise again
before reaching the moving average line.
Relative Strength Index (RSI):

The RSI is a financial technical analysis momentum oscillator measuring the velocity and
magnitude of directional price movement by comparing upward and downward close-to-close
movements. RSI can be calculated for a scrip by adopting the following formula.
Average Gain per Day

Rs =
Average Loss per Day
The RSI is calculated for 5, 7, 9 and 17 days. If the time period taken for calculation is more, the
possibility of getting wrong signals is reduced.
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Cues to sell
If the RSI touches 70
Cues to buy
If the RSI touches 30
Rate of Change (ROC)

The Rate of change (ROC) indicator measures the percentage change of the current price as
compared to the price a certain number of periods ago. The ROC indicator can be used as a guide
for determining overbought and oversold conditions. ROC displays the difference between the
current price and price x-time periods ago. As prices increase, the ROC rises and as prices fall,
the ROC falls. The 10-day ROC is an excellent short to intermediate term overbought/oversold
indictor. The formula for rate of change is expressed bellow.
ROC = (Current price / Price n periods ago)*100
The main advantage of ROC is the identification of overbought and oversold region. The
historic high and low values of the ROC should be identified at first to locate the overbought and
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oversold region. If the scrips ROC reaches the historic high values, the scrip is in the overbought
region and a fall in the value can be anticipated. Likewise, if the scrips ROC reaches the historic
low value, the scrip is in the oversold region, a rise in the scrips price can be anticipated.
Investor can sell the scrip in the overbought region and buy it in the oversold region.
Cues to sell
If the ROC touches the overbought region
Cues to buy
If the ROC touches the oversold region
Support and Resistance Level.

A support level exists at a price where considerable demand for that stock is expected to prevent
further fall in the price level. The fall in the price may be halted for the time being or it may
result even in price reversal in the support level,demand for the particular scrip is expected.
In the resistence level,the supply of scrip would be greater than the demand and further rise in
price is prevented. The selling pressure is greater and the increase in price is halted for the time
being.
Cues to sell
If the prices touch the resistance level
Cues to buy
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If the prices touch the support level
Chapter II
Research design
2.1 Title of the study
A STUDY ON COMMODITY MARKETS IN INDIA WITH REFERENCE TO
AGRICULTURAL PRODUCTS
2.2 Problem statement

The commodity markets are more volatile in nature. The investors need to answer various
questions like,
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What commodity to buy?
What is the right time to buy and sell?
What is the risk involved?
Therefore the analysis of the commodity markets is not easy. It involves high complexity.
Therefore a high degree of technical knowledge and expertise is required.
In this regard, the study provides a thorough understanding of the commodity markets. The
study uses technical analysis as a tool to guide the investors to avoid the various risks and track
the the commodity markets.
2.3 Review of Literature

Commodity Markets: New Investment Avenues - Arindam Banerjee
The study traces the history of the commodity markets in India and examines the present
scenario. The inception of Commodity Derivative markets in India started way back in 1875,
with cotton being the first commodity to be traded. Trading in oilseeds followed this in 1900.
The next to follow was forward trading in raw Jute and Jute goods in 1912. The volumes traded
in those markets in the years cited were bleak and investor awareness was under scrutiny. Today,
the scenario has changed radically and trading in commodities is considered to be the next
biggest and the best in the investor fraternity. Commodities are such pervasive instruments that
one cannot be a successful investor in other investment avenues such as stocks, bonds or even
currencies, without a thorough understanding of them. Nowadays, commodities are being treated
as a separate asset-class and primary among them are Gold and Oil
Facts and Fantasies about Commodity Futures - Gary Gorton

The study focuses on the present scenario of the commodity futures and the differences
between the commodity futures and other financial assets. Commodity futures are still a
relatively unknown asset class, despite being traded in the U.S. for over 100 years and elsewhere
for even longer. This may be because commodity futures are strikingly different from stocks,
bonds, and other conventional assets.
Some of the differences focused in the research are: Page 25

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Commodity futures are derivative securities; they are not claims on long-lived
corporations
They are short maturity claims on real assets
Unlike financial assets, many commodities have pronounced seasonality in price levels
and volatilities. Another reason that commodity futures are relatively unknown may be
more prosaic, namely, there is a paucity of data.
Behavior of Market Prices of Agricultural Commodities - S R Takle

The article claims that the agricultural prices particularly of food grains and oilseeds play an
important role in the whole national economy of India. They affect production decisions by the
farmers and their incomes. Variations in prices of agricultural commodities are a big problem in
Indian agriculture because of the dependence of production on monsoons. Agricultural prices
exhibit spatial and temporal price fluctuations. Temporal price variations include seasonal,
annual and long-term fluctuations. The article analyses the temporal price variation in food
grains and oilseeds and makes suggestions to minimize the variation in prices of agricultural
commodities in India.
2.4 Objectives of the study
To study the present scenario of the commodity markets.

To understand method of pricing agricultural commodity futures.
To understand hedging, speculation and arbitrage in commodity futures.
To analyze agricultural commodities by using technical analysis.
2.5 SCOPE OF THE STUDY

The study is confined to Indian commodity markets.
The study considers four agricultural commodities and the data collected from April 1st
2009 to March 31st 2010.
National commodity and derivatives exchange limited
Multi commodity exchange of India limited.
National multi commodity exchange limited.
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2.6 Research methodology

The study uses both the primary and secondary sources to collect the data.
Types of data
Primary data
Professionals in the field
Secondary data
Books
Newspapers
Internet
Sample Design
For the purpose of study, four agricultural products were randomly selected. The products are:
Chana
Maize
Soybean
Turmeric
Data Analysis
The data collected was analyzed by using technical tools. The technical tools used are:
Line Chart
Simple Moving Average
Rate of Change
Relative Strength Index
Resistance and Support line
2.7 Operational definitions

Bear Market: A period of declining market prices.
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Bull Market: A period of rising market prices.
Cross-hedging: Hedging a commodity using a different but related futures contract when there
is no futures contract for the cash commodity being hedged and the cash and futures markets
follow similar price trends. For example, hedging cull cows on the live cattle futures market.
Delivery: The transfer of the cash commodity from the seller of a futures contract to the buyer of
a futures contract.
In-the-Money Option: An option having intrinsic value. A call option is in-the-money if its
strike price is below the current price of the underlying futures contract. A put option is in-themoney if its strike price is above the current price of the underlying futures contract.
Out-of-the-Money Option: An option with no intrinsic value, i.e., a call whose strike price is
above the current futures price or a put whose strike price is below the current futures price.
Intrinsic Value: The difference between the strike price and the underlying futures price for an
option that is in-the-money.
Long: One who has bought futures contracts or plans to own a cash commodity.
Purchasing Hedge (long hedge): Buying futures contracts to protect against a possible price
increase of cash commodities that will be purchased in the future. At the time the cash
commodities are bought, selling an equal number and type of futures contracts as those that were
initially purchased closes the open futures position.
Selling Hedge (short hedge): Selling futures contracts to protect against possible declining
prices of commodities that will be sold in the future. At the time the cash commodities are sold,
purchasing an equal number and type of futures contracts as those that were initially sold closes
the open futures position.
Strike Price: The price at which the futures contract underlying a call or put option can be
purchased (call) or sold (put). Also called exercise price.
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Underlying Futures Contract: The specific futures contract that can be bought or sold by
exercising an option.
Technical Analysis: Anticipating future price movements using historical prices, trading
volume, open interest, and other trading data to study price patterns.
2.8 Limitations of the study.

The study is confining to historical price data. It provides only a gist, how the technical
analysis could be used for the buy/hold/sell decision-making.
Due to the time constraint, the detailed study was not possible.
The commodity market is a vast subject so in-depth study was not possible.
2.9 CHAPTER SCHEME

1. Introduction
This chapter provides a brief description of the commodities market in India, various
commodities traded, and a special importance has been given to agricultural commodities.
2. Research design
The chapter includes the title of the study, statement of the problem, literature review
objectives, scope and limitations of the study and chapter scheme.
3. Profile of the Indian commodity markets

This chapter provides the profile of the commodity market in India, its evolution,
present scenario, regulation, and trends. The chapter also provides a brief profile of NCDEX,
MCX and NMCE.
4. Analysis and interpretation of data

This chapter includes analysis and interpretation of data. The information collected is
reduced to tables, graphs and charts.
5. Findings, suggestions and conclusion

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This chapter provides the various facts found during the study. The conclusion is given
based on the findings and certain recommendations are made to the investors while investing
in commodity markets.
Chapter III
Profile of the Indian commodity markets
Introduction
India is among the top 5 producers of most of the commodities, in addition to being a major
consumer of bullion and energy products. Agriculture contributes about 22% to the GDP of the
Indian economy. It employs around 57% of the labor force on a total of 163 million hectares of
land. Agriculture sector is an important factor in achieving a GDP growth of 8%. All this
indicates that India can be promoted as a major center for trading of commodity derivatives.
The Indian economy is witnessing a mini revolution in commodity derivatives and risk
management. Commodity options trading and cash settlement of commodity futures had been
banned since 1952 and until 2002 commodity derivatives market was virtually non-existent,
except some negligible activity on an OTC basis. Now in September 2005, the country has 3
National level electronic exchanges and 21 regional exchanges for trading commodity
derivatives. As much as 80 commodities have been allowed for derivatives trading.
Evolution
The evolution of the Indian commodity markets dates backs to the year 1875 when the
Bombay Cotton Exchange was established. Today India has 24 Exchanges and more than 100
commodities traded. The development of Indian commodity markets can be studied under 3
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periods. They are the pre-independence period, the post-independence period and the postliberalization period.
Pre-independence period
Bombay Cotton Trade Association Ltd., set up in 1875, was the first organized futures market.
Bombay Cotton Exchange Ltd. was established in 1893 following the widespread discontent
amongst leading cotton mill owners and merchants over functioning of Bombay Cotton Trade
Association.
The Futures trading in oilseeds started in 1900 with the establishment of the Gujarati Vyapari
Mandali, which carried on futures trading in groundnut, castor seed and cotton.
Futures trading in wheat were existent at several places in Punjab and Uttar Pradesh. But the
most notable futures exchange for wheat was chamber of commerce at Hapur set up in 1913.
Calcutta Hessian Exchange Ltd. was established in 1919 for futures trading in raw jute and
jute goods.
Futures trading in bullion began in Mumbai in 1920.
Organized futures trading in raw jute began in 1927 with the establishment of East Indian Jute
Association Ltd.
In 1945 to form the East India Jute & Hessian Ltd. to conduct organized trading in both Raw
Jute and Jute goods. Several other exchanges were created in the country to trade in diverse
commodities.
Post-independence period
The Parliament passed Forward Contracts (Regulation) Act, 1952 which regulated forward
contracts in commodities all over India. The Act applies to goods, which are defined as any
movable property other than security, currency and actionable claims.
The Act prohibited options trading in goods along with cash settlements of forward trades,
rendering a crushing blow to the commodity derivatives market. Under the Act, only those
associations or exchanges, which are granted recognition by the Government, are allowed to
organize forward trading in regulated commodities.
The Exchange, which organizes forward trading in commodities, can regulate trading on a
day-to-day basis.
The Forward Markets Commission provides regulatory oversight under the powers
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delegated to it by the central Government.
The Central Government - Department of Consumer Affairs, Ministry of Consumer Affairs,
Food and Public Distribution - is the ultimate regulatory authority.
The Forwards Markets Commission (FMC) was established in 1953 under the Ministry of
Consumer Affairs and Public Distribution. In due course, several other exchanges were
created in the country to trade in diverse commodities.
The commodity derivatives market got a crushing blow in 1960s, following several years
of severe draughts that forced many farmers to default on forward contracts.
Forward trading was banned in many commodities considered primary or essential. As a
result, commodities derivative markets dismantled and went underground where to some
extent they continued as OTC contracts at negligible volumes.
In 1970s and 1980s the Government relaxed forward trading rules for some commodities.
Post-liberalization period
After the Indian economy embarked upon the process of liberalization and globalization in
1990, the Government set up a Committee in 1993 to examine the role of futures trading. The
Committee (headed by Prof. K.N. Kabra) recommended allowing futures trading in 17
commodity groups. It also recommended strengthening of the Forward Markets Commission,
and certain amendments to Forward Contracts (Regulation) Act 1952, particularly allowing
options trading in goods and registration of brokers with Forward Markets Commission. The
Government accepted most of these recommendations and futures trading were permitted in all
recommended commodities. The recommendations of the committee were as follows:
The Forward Markets Commission (FMC) and the Forward Contracts (Regulation)
Act, 1952, would need to be strengthened.
Enlisting more members, ensuring capital adequacy norms and encouraging
computerization would enable these exchanges to place themselves on a better footing.
In-built devices in commodity exchanges such as the vigilance committee and the
panels of surveyors and arbitrators be strengthened further.
The FMC which regulates forward/ futures trading in the country, should continue to
act a watchdog and continue to monitor the activities and operations of the
commodity exchanges.
Amendments to the rules, regulations and byelaws of the commodity exchanges should
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require the approval of the FMC only.
Some of the commodity exchanges, particularly the ones dealing in pepper and castor
seed, be upgraded to the level of international futures markets.
The Committee recommended the futures trading in the commodities like Basmati rice,
Cotton and Kapas, Raw jute and Jute goods, Groundnut, rapeseed/mustard seed,
cottonseed, sesame seed, sunflower seed, Safflower seed, copra and soybean, and oils
and oilcakes of all of them, Rice bran oil, Castor oil and its oil cake, Linseed, Silver,
Onions.
Present scenario
The commodity market in India facilitates multi commodity exchange within and outside
the country based on requirements. Commodity trading is one facility that investors can explore
for investing their money. The India Commodity market has undergone lots of changes due to the
changing global economic scenario; thus throwing up many opportunities in the process.
Demand for commodities both in the domestic and global market is estimated
to grow by four
times than the demand currently is by the next five years. At present there are 24 commodity
exchanges and more than 100 commodities are traded.
Commodity markets have been in a bull trend. Some of the major drivers that have
contributed in this stupendous growth of commodity markets are: Increasing influence of Asian demand, particularly from rapidly industrializing China
and India.
Increase in commodities prices in international markets as a result of demand growth,
reinforced by tight supply capacities, tense geopolitical conditions (especially with
respect to the oil market) and intense speculative activity.
With the rise in prices of crude oil, metals and minerals, commodity prices reached
record historical levels in nominal terms in 2006, which increased by more than 30%
between 2005 and 2006 (and by 80% from 2000 to 2006).
The considerable rise in prices has had an impact on incomes of developing countries. It
is estimated that extra revenues resulting from commodity exports were around 6.7
percentage points of GDP for oil-exporting countries and about 3 percentage points for
countries exporting mining products.
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Increases in demand from developing countries stimulated by a particularly vigorous
commodity consumption per unit of GDP compared to that of developed countries, faster
economic growth, and increasing population.
"Globalization" of securities and commodities markets.
Baby boomers are in the middle of their peak savings years and have been one of the
major causes of huge inflows of money into the stock market and into mutual funds.
The increased use of food crops for production of bio-fuels is an important factor that led
to large increases in the prices of vegetable oils and grains in 2007, which in turn
contributed to an overall 15 percent increase in the index of agricultural prices and a 20
percent rise in food prices.
The prices of metals have increased more than other commodity prices over the last four
years, largely because of an especially strong demand in China.

Shortages of equipment and skilled workers have significantly increased development
costs, and ore grades are deteriorating.
Regulation of commodity markets in India

At present, there are three tiers of regulations of forward/futures trading system in India,
namely: Government of India.
Forward Markets Commission (FMC).
Commodity exchanges.
The need for regulation arises on account of the fact that the benefits of futures markets
accrue in competitive conditions. Proper regulation is needed to create competitive conditions. In
the absence of regulation, unscrupulous participants could use these leveraged contracts for
manipulating prices. This could have undesirable influence on the spot prices, thereby affecting
interests of society at large. Regulation is also needed to ensure that the market has appropriate
risk management system. In the absence of such a system, a major default could create a chain
reaction. The resultant financial crisis in a futures market could create systematic risk.
Regulation is also needed to ensure fairness and transparency in trading, clearing, settlement and
management of the exchange so as to protect and promote the interest of various stakeholders,
particularly nonmember users of the market.
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Rules governing the Commodity Exchanges

The Stock Exchanges have been governed by two kinds of rules. First, the rules framed by the
Forward Markets Commission and the rules indicated in the Forward Contracts (Regulation) Act,
1952. A brief description of these rules are given below.
The FMC prescribes the following regulatory measures to Exchanges:
Limit on net open position as on the close of the trading hours. Some times limit is also
imposed on intraday net open position. The limit is imposed operatorwise, and in
some cases, also member wise
Circuitfilters or limit on price fluctuations to allow cooling of market in the event of
abrupt up swing or downswing in prices.
Special margin deposit to be collected on outstanding purchases or sales when price
moves up or down sharply above or below the previous day closing price. By making
further purchases/sales relatively costly, the price rise or fall is sobered down. This
measure is imposed only on the request of the exchange.
Circuit breakers or minimum/maximum prices: These are prescribed to prevent futures
prices from falling below as rising above not warranted by prospective supply and
demand factors. This measure is also imposed on the request of the exchanges.
Skipping trading in certain derivatives of the contract, closing the market for a specified
period and even closing out the contract: These extreme measures are taken only in
emergency situations.
Rules framed by Forward Contracts (Regulation) Act, 1952 towards Exchanges:
The trading in commodities notified under section 15 of the Act can be conducted
only on the exchanges, which are granted recognition by the central government.
All the exchanges, which deal with forward contracts, are required to obtain certificate
of registration from the FMC.
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All the exchanges are 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 their working.
Rules governing the Intermediaries
The Exchanges provides an automated trading facility in all the commodities admitted
for dealings on the spot market and derivative market.

Trading on the exchange is allowed only through approved workstations located at
locations for the office of a trading member as approved by the exchange.
Each trading member is required to have a unique identification number which is
provided by the exchange and which will be used to log on to the trading system.
A trading member has a nonexclusive permission to use the trading system as provided
by the exchange in the ordinary course of business as trading member.
Trading members have to pass a certification program, which has been prescribed by the
exchange. In case of trading members, other than individuals or sole proprietorships,
such certification program has to be passed by at least one of their directors/ employees/
partners / members of governing body.
Each trading member is permitted to appoint a certain number of approved users as
notified from time to time by the exchange.
The trading member or its approved users are required to maintain complete secrecy of
its password. Any trade or transaction done by use of password of any approved user of
the trading member, will be binding on such trading member. Approved user shall be
required to change his password at the end of the password expiry period.
The exchange operates on all days except Saturday and Sunday and on holidays that it
declares from time to time.
The exchange announces the normal trading hours/ open period in advance from time to
time. In case necessary, the exchange can extend or reduce the trading hours by notifying
the members. Trading cycle for each commodity/ derivative contract has a standard
period, during which it will be available for trading.
Derivatives contracts expire on a predetermined date and time up to which the contract
is available for trading. This is notified by the exchange in advance. The contract
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expiration period will not exceed twelve months or as the exchange may specify from
time to time.
In the event of a default by the seller or the buyer in delivery of commodities or payment
of the price, the exchange closes out the derivatives contracts and imposes penalties on
the defaulting buyer or seller, as the case may be.
Delivery in respect of all deals for the clearing in commodities happens through the
depository clearing system. The delivery through the depository clearing system into the
account of the buyer with the depository participant is deemed to be delivery,
notwithstanding that the commodities are located in the warehouse along with the
commodities of other constituents.
Payment in respect of all deals for the clearing has to be made through the clearing
banks.
The exchange specifies from time to time the delivery units for all commodities admitted
to dealings on the exchange.
Every clearing member must have a clearing account with any of the Depository
Participants of specified depositories.
Rules governing the investors grievances, arbitration.

In matters where the exchange is a party to the dispute, the civil courts at Mumbai have
exclusive jurisdiction and in all other matters, proper courts within the area covered
under the respective regional arbitration center have jurisdiction in respect of the
arbitration proceedings falling/ conducted in that regional arbitration center.
If the value of claim, difference or dispute is more than Rs.25 Lakh on the date of
application, then such claim, difference or dispute are to be referred to a panel of three
arbitrators. If the value of the claim, difference or dispute is up to Rs.25 Lakh, then they
are to be referred to a sole arbitrator.
Tools for regulation.
Limits on speculative open position

Price limits
MTM
Gross upfront margining
Special margins
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NATIONAL COMMODOTY AND DERIVATIVES EXCHANGE LIMITED

(NCDEX)
National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally managed
on-line multi commodity exchange. The shareholders of NCDEX comprises of large national
level institutions, large public sector banks and companies. NCDEX is a public limited company
incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for
Commencement of Business on May 9, 2003. It commenced its operations on December 15,
2003.
Forward Markets Commission regulates NCDEX 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. It is located in Mumbai and offers facilities to its members in about 91
cities throughout India at the moment.
Promoters
ICICI Bank Limited, Life Insurance Corporation of India (LIC), National Bank for Agriculture
and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE).
Other shareholders:
Canara Bank, Punjab National Bank (PNB), CRISIL Limited, Indian Farmers Fertilizer
Cooperative Limited (IFFCO), Goldman Sachs, Intercontinental Exchange (ICE) and Shree
Renuka Sugars.
Capital structure:
Particulars
Authorized capital
Issued & Subscribed
capital
Board of directors
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Equity
Preference
Total
(Rs. in crores)
(Rs. In crores)
(Rs. In crores)
60
30
10
10
70
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The shareholders holding stake of 10% or more have their representatives on the Board of the
Exchange. The Board of Directors comprises 8 Directors who are well known, highly
experienced and are independent. The Managing Director is the only whole-time Director. Mr.
B. V. Bhargava is the non-executive Chairman of the Board.
Mr. R. Ramaseshan is the
Managing Director and Chief Executive Officer
The Trading system

The trading system of NCDEX comprises of three divisions. Namely trading, clearing and
settlement. A brief description is given below.
Trading
The trading system on the NCDEX provides a fully automated screenbased trading for
futures on commodities on a nationwide basis as well as an online monitoring and surveillance
mechanism. It supports an order driven market and provides complete transparency of trading
operations. The trade timings of the NCDEX are 10.00 a.m. to 4.00 p.m.
The NCDEX system supports an order driven market, where orders match automatically. Order
matching is essentially on the basis of commodity, its price, time and quantity. All quantity fields
are in units and price in rupees. The exchange specifies the unit of trading and the delivery unit
for futures contracts on various commodities. The exchange notifies the regular lot size and tick
size for each of the contracts traded from time to time. When any order enters the trading system,
it is an active order. It tries to find a match on the other side of the book. If it finds a match, a
trade is generated. If it does not find a match, the order becomes passive and gets queued in the
respective outstanding order book in the system. Time stamping is done for each trade and
provides the possibility for a complete audit trail if required. NCDEX trades commodity futures
contracts having onemonth, twomonth and three month expiry cycles. All contracts expire on
the 20th of the expiry month.
Clearing
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National Securities Clearing Corporation Limited (NSCCL) undertakes clearing of trades
executed on the NCDEX. The settlement guarantee fund is maintained and managed by NCDEX.
Only clearing members including professional clearing members (PCMs) are entitled to clear and
settle contracts through the clearing house.
At NCDEX, after the trading hours on the expiry date, based on the available information, the
matching for deliveries takes place. Firstly, on the basis of locations and then randomly, keeping
in view the factors such as available capacity of the vault or warehouse, commodities already
deposited and dematerialized and offered for delivery etc. Matching done by this process is
binding on the clearing members. After completion of the matching process, clearing members
are informed of the deliverable or receivable positions and the unmatched positions. Unmatched
positions have to be settled in cash. The cash settlement is only for the incremental gain or loss
as determined on the basis of final settlement price.
Settlement
Futures contracts have two types of settlements, the MTM settlement, which happens on a
continuous basis at the end of each day, and the final settlement, which happens on the last
trading day of the futures contract.
On the NCDEX, daily MTM settlement and final MTM settlement in respect of admitted deals
in futures contracts are cash settled by debiting or crediting the clearing accounts of CMs with
the respective clearing bank. All positions of a CM, brought forward, created during the day or
closed out during the day, are market to market at the daily settlement price or the final
settlement price at the close of trading hours on a day. On the date of expiry, the final settlement
price is the spot price on the expiry day. The responsibility of settlement is on a trading cum
clearing member for all trades done on his own account and his clients trades.
NATIONAL MULTI COMMODITY EXCHANGE (NMCE)

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National Multi Commodity Exchange of India Ltd. (NMCE) was the first such exchange to be
granted permanent recognition by the Government. National Multi-Commodity Exchange of
India Limited, the first De-Mutualised Electronic Multi-Commodity Exchange granted the
national status on a permanent basis by the government of India and operational since 26 th
November 2002.
In April 1999 the Government took a landmark decision to remove all the commodities from
the restrictive list. Food-grains, pulses and bullion were not exceptions.
The long spell of
prohibition had stunted growth and modernization of the surviving traditional commodity
exchanges. Therefore, along with liberalization of commodity futures, the Government initiated
steps to cajole and incentives the existing Exchanges to modernize their systems and structures.
Faced with the grudging reluctance to modernize and slow pace of introduction of fair and
transparent structures by the existing Exchanges, Government allowed setting up of new modern,
demutualised Nation-wide Multi-commodity Exchanges with investment support by public and
private institutions. National Multi Commodity Exchange of India Ltd. (NMCE) was the first
such exchange to be granted permanent recognition by the Government.
Promoters
Punjab National Bank, Gujarat State Agricultural Marketing Board, Neptune Overseas
Limited, Reliance Money, National Institute of Agricultural Marketing.
Management
Shri. B. B. Pattanaik, is Chairman of the Board of Directors
Shri. Kailash. R. Gupta - Managing Director
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The Trading System

Benefits of futures market, viz., price discovery and price risk management flow more easily
from an Order-driven system rather than Quote-driven system. NMCE follows the former
system. NMCE does not support any market maker. Traders submit orders and the incoming
orders are matched against the existing orders in the order book.
Transactions are cleared and settled through NMCEs in-house Clearing and Settlement
House, which is connected to all its Members and the Clearing Banks. Delivery of the underlying
commodities is permitted only through a Central Warehousing Corporation (CWC) receipt,
which meets highest contemporary international standards. Anonymity of trading participants
and effective risk management system strengthens the trust of the participants in the trading
system, which is a precondition for enhancing breadth and depth of the market.
Trading Cum Clearing Member (TCM): Is one who has the right to execute transactions in
addition to a right to clear its transactions in contracts executed at NMCE either on his own
behalf or on behalf of other Trading Members.
Trading Member/Broker (TM): Is one who has the right to execute transactions in the trading
system of the exchange and the right to have contracts in his own name. The TM can also deal on
behalf of clients (Registered Non Members) or enlist Sub Brokers who may in turn have their
own set of clients.
Institutional Clearing Members (ICMs): Are professional entities providing clearing services
to their institutional clients. They however do not have the right to trade on their own account.
Simply put, participants trade in any market to make money. If transactions costs are high,
there will be less incentive to trade. Notwithstanding the distinctive advantages NMCE offers to
its customers, it has not lost sight of the need to provide membership as well as trading, clearing
and settlement facilities at lowest possible cost. To this end, the exchange has not only acquired
technology at lowest cost going by global standards, but has also put in place effective cost
cutting strategies to minimize non-capital expenditure. The uniqueness of its business model as
well as cost structure provides clear competitive advantage to NMCE over other comparable
Indian Exchanges
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Multi Commodity Exchange (MCX)

Multi Commodity Exchange of India Ltd is a demutualised nationwide electronic
commodity futures exchange set up by Financial Technologies (India) Ltd. with permanent
recognition from Government of India for facilitating online trading, clearing & settlement
operations for futures market across the country. The exchange started operations in November
2003.
MCX has achieved three ISO certifications including ISO 9001:2000 for quality
management, ISO 27001:2005 - for information security management systems and ISO
14001:2004 for environment management systems. MCX offers futures trading in more than 40
commodities from various market segments including bullion, energy, ferrous and non-ferrous
metals, oil and oil seeds, cereal, pulses, plantation, spices, plastic and fibre. The exchange strives
to be at the forefront of developments in the commodities futures industry and has forged
strategic alliances with various leading International Exchanges, including Tokyo Commodity
Exchange, London Metal Exchange, New York Mercantile Exchange, Bursa Malaysia
Derivatives, Berhad and others.
Promoter
Financial Technologies (India) Ltd
Other shareholders
NYSE Euronext, State Bank of India and its associates (SBI), National Bank for Agriculture
and Rural Development (NABARD), National Stock Exchange of India Ltd. (NSE), SBI Life
Insurance Co. Ltd., Bank of India (BOI), Bank of Baroda (BOB), Union Bank of India,
Corporation Bank, Canara Bank, HDFC Bank, Fid Fund (Mauritius) Ltd. - an affiliate of Fidelity
International, ICICI Ventures, IL&FS, Kotak group, Citi Group and Merrill Lynch.
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Board of directors
Mr. Venkat Chary Chairman.

Mr. Jignesh Shah - Vice Chairman.
Mr. Lambertus Rutten - Managing Director & CEO.
8 Independent Directors
4 Non Executive directors
Trading System
The best five buy and sell orders for every contract available for trading are visible to the
market and orders are matched based on price time priority logic. Orders can be placed with time
conditions and/ or price conditions. Time related Conditions DAY order- A Day order is valid for
the day on which it is entered. If the order is not matched during the day, the order gets cancelled
automatically at the end of the trading day. GTC - A Good Till Cancelled (GTC) order is an order
that remains in the system until the expiry of the respective contract in which it is entered or until
when the same is cancelled by the member. GTD - A Good Till Date (GTD) order is valid till the
date specified by the member. After the specified date the system automatically cancels the
unexecuted orders. IOC - An Immediate or Cancel (IOC) order allows a member to execute the
orders as soon as the same is placed in the market, failing which the order will get cancelled
immediately Price Conditions Limit Order The order wherein the price is to be specified while
placing the same. Market Order The order at the best available price at the time of placing the
same.
Margins
MCX follows a comprehensive and stringent margining system for all future contracts traded
on the Exchange platform. Actual margining and position monitoring is done on an on-line basis.
For the purpose of computing and levying the margins, MCX uses SPAN (Standard Portfolio
Analysis of Risk) system which follows a risk-based and portfolio-based approach. The Initial
Margin requirement is based on a worst-case loss scenario of portfolio at client level to cover
VaR (value at Risk) over a one-day horizon, subject to a minimum Base Margin defined by FMC
for the respective commodity.
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The SPAN Risk Parameter File (RPF) is generated by the Exchange periodically at predefined timings and RPF files so generated are provided to the members using the FTP service
and on the Exchange website. In addition to SPAN margins, MCX levies Additional margins
and/ or Special margins whenever deemed necessary considering the volatility and price
movement in the commodities. Such margins are also levied as per the directions of FMC Tender
Period margins and Delivery Period Margins are levied on contracts nearing expiry to ensure
non-default in commodity delivery.
Trends in commodity markets.

With the advancement of Internet technology in the recent years commodity futures
trading has become entirely possible without the interaction of a commodity broker.
The number of commodity futures traded has increased gradually. In India at present more
than 100 commodities are traded.

The yellow metal gold is trading at its high.
The oil prices soaring.
Farmers facing price and volume risks due to uncertain rainfall.
Speculation in forward markets has increased.
Chapter IV
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Data analysis and interpretation
To understand the pricing of agricultural commodity futures.

To understand the futures prices on agricultural commodities, first we need to understand the
arbitrage arguments. Consider the following case:The spot market rate of turmeric is Rs.11,200 per quintal. The rate of interest available is at 8%.
Verify the arbitrage opportunities,
If the three months futures price of turmeric is Rs.11,800 per quintal.
If the three months futures price of turmeric is Rs.11,800 per quintal

In this case the arbitrager borrows Rs.11,200 at 8% p.a., buys the turmeric in the spot
market. Simultaneously sell the three months futures contract at Rs.11,800 per quintal.
At the end of three months, the arbitrager delivers turmeric and receives Rs.11,800 per
quintal.
The interest and principal the arbitrager need to pay is Rs.11,424. By following this
strategy, the arbitrager locks in a profit of Rs.376 per quintal (Rs.11,800 Rs.11,424) at
the end of three months.

In this scenario, the arbitrager shorts turmeric at Rs.11,200 in the spot market, invest it
at the rate of 8% p.a. for three months.
Simultaneously takes a long position in three months futures contract on turmeric at
Rs.11,000 per quintal.
At the end of three months, the sale proceeds of turmeric grows to Rs.11,424. The
arbitrager pays Rs.11,000 and takes the delivery of turmeric.
The arbitrager by following this strategy makes a profit of Rs.224 per quintal.
So the effective futures price is: Page 46

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The arbitrage exists when the futures price of turmeric is more than Rs.11,424 per quintal
and also when the futures price is less than Rs.11,424 per quintal.
But there is no arbitrage at Rs.11,424 per quintal. Therefore, Rs.11,424 per quintal is the
effective futures price of a three months turmeric contact.
As seen above, the agricultural commodities are priced based on the arbitrage arguments. The
commodity is priced at a point where there is no opportunity for arbitrage.
Table 4.1
The affect of arbitrage on pricing
Spot price (Rs.)
Future price
11,200
11,200
11,200
(Rs.)
11,800
11,000
11,424
Interest (Rs.)
Interest &
Arbitrage (Rs.)
224
224
224
principal (Rs.)
11,424
11,424
11,424
376
224
0
To understand Hedging, speculation and arbitrage in commodity futures.
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Hedging
Long hedge in commodity futures.
The long hedge in the commodity market is done to reduce the price risk, which could arise in
the commodities.
Consider the case, a cattle feed manufacturer needs maize to manufacture cattle feed. He
knows that he have to buy 100 MT of maize in four months from now.
On April 1st 2010, The spot price of Maize at Davangere was Rs.902 per quintal. The July
2010 contract was trading at Rs.931 per quintal on NCDEX.
Table 4.2
The contract specification of Maize
Trading system
Trading hours
NCDEX trading system

Mondays through Fridays: 10.00 am to 5.00 pm
Unit of trading
Delivery unit
Quotation or base value
Tick size
Saturdays: 10.00 am to 2.00 pm

10 MT
10 MT
Rs. Per quintal
50 paisa
In this scenario, the manufacturer buys 10 future contracts of 10 MT on NCDEX at a price of

RS.931 per quintal. On the expiry, the spot price may be more than Rs.931 per quintal or less
than that. Now let us understand how this works.
If the spot price exceeds Rs.931 per quintal

Assume in the month of July the spot price of Maize at Davangere has risen to Rs.945 per
quintal.
The manufacturer pays Rs.9,45,000 to buy Maize from spot market.
Page 48

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Because July is the month of futures contract, the future prices should be very close to
spot prices of Rs.945 per quintal.

Now the manufacturer closes his long futures position at Rs.945 making a gain of Rs.14
per quintal or Rs.14000 on its long futures position.
The effective cost of Maize purchased works out to be about Rs.931 per quintal or
Rs.9,31,000.
If the spot price falls below Rs.931 per quintal

Assume the spot prices at Davangere fell down to Rs.925 per quintal in July.
The manufacturer pays Rs. 9,25,000 to buy 100 MT of Maize at spot market and since
July is the month for the future contracts to expire, the futures price should be very close
to the spot price of Rs.925 per quintal.
The manufacturer closes his long position at Rs.925 making a loss of Rs.6 per quintal or
Rs.6000 in its long futures position.
The effective cost of purchasing maize works out to be about Rs.931 per quintal or
Rs.9,31,000 in total.
Short hedge in commodity futures

A short hedge is appropriate when the hedger already owns the asset, or is likely to own the
asset and expects to sell it at some time in the future. A short hedge is used in reducing the price
risk associated with selling an output.
Consider the following case. The producer of turmeric knows that he will be selling 50
MT of turmeric four months from now.
On 1st April 2010, turmeric was selling at Rs.11,514 a quintal at Nizamabad.
The July 2010 turmeric future contract was selling at Rs.10879 on NCDEX platform.
Table 4.3
Contract specification of Turmeric
Page 49

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Trading system
Trading hours

Unit of trading
Delivery unit
Tick size

10 MT
10 MT
Rs. Per quintal
Re.1
In this scenario, the producer sells 5 turmeric future contracts, at Rs.10879, which will expire
in the month of July. On the expiry the spot price may be more than future price or less than
future price. Now let us understand how this works.
If the spot price exceeds Rs.10,879 per quintal

Assume that the spot price on expiry is Rs.11000 a quintal.
The producer realized Rs.55,00,000 under his sale contract.
Because July is the delivery month of futures contract, the futures price in July should be
very close to the spot price of Rs.11,000 per quintal.
Now the producer closes his short futures position at Rs.10879 by making a loss of
Rs.121 per quintal or Rs.60500 on its short futures position.
The total amount realized from both the futures position and the sale contract is therefore
about Rs.10879 per quintal or Rs.54,39,500.
If the spot price falls below Rs.10,879?

Assume that the spot price is Rs.10700 per quintal.
The producer realizes Rs.53,50,000 under his sale contract. Because July is the delivery
month for futures contract, the futures price in July should be very close to the spot price
of Rs.10,700 per quintal.
The producer closes his short position at Rs.10,879 per quintal making a profit of Rs.179
per quintal or Rs.89500 on its short future position. The total amount realized from both
the futures position and the sales contract is about Rs.10879 or Rs.54,39,500 in total.
Page 50

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Therefore the purpose of hedging is not to make profits, but to lock on to a price to be paid in
the future upfront. In the above cases, we assume that the futures position is closed out in the
delivery month.
Speculation in commodity futures

Basically there are two important strategies used by the speculators in the commodity futures
markets. Let us analyze the strategies in detail.
If the commodity is bearish

Consider the case of a speculator who has a clear view of movements of prices of Maize. At
present Maize is selling at Rs.900 and he speculates that due to sufficient monsoon, the supply of
Maize is going to rise in the near future and hence the price is going to fall.
In this scenario, the speculator has to sell the Maize future contract.
Simple arbitrage ensures that the price of a futures contract on a commodity moves
correspondingly with the price of the underlying commodity. If the commodity price
rises, so will the futures price. If the commodity price falls, so will the futures price.
Now the trader sells 10 three months futures contract which is for the delivery of 10 MT
of Maize. The value of future contract is Rs.930 per quintal or Rs.9,30,000 in total.
After three months if the speculator is correct the prices should fall. Assume the prices
fell to Rs.920 per quintal. Now the speculator closes his short position at Rs.9,20,000
making a gain of Rs.10,000.
So from the above case it is clear that if the commodity is bearish a speculator has to sell the
futures.
If the commodity is bullish
Page 51

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On April 1st 2010 the Chana was trading at Rs.2291 at Delhi spot market. The July 2010
future contract is trading at Rs. 2522 per quintal at NCDEX.
Table 4.4
Contract specification of Chana
Trading system
Trading hours

Unit of trading
Delivery unit
Tick size

10 MT
10 MT
Rs. Per quintal
Re.1
In this scenario the speculator has to buy the futures.
Assume that the speculator bought the three-month futures for delivery of 50 MT at a
price of Rs.2522 per quintal or Rs.12,61,000.

After three months if the speculator is correct the prices should go up. Assume that the
prices rised to Rs.2600 per quintal. The trader closes his long position at Rs.2600 per
quintal making of Rs.78 per quintal or Rs.39,000.
Arbitrage
If the commodity futures are overpriced
Page 52

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Assume that the gold is trading at Rs.16300 per 10gms in the spot market at Ahmedabed
on 10th April 2010.
On the same date the three month futures is trading at Rs.16800 per 10gms at NCDEX
and seems overpriced.
Table 4.5
The contract specification of soybean
Trading system
Trading hours

Unit of trading
Delivery unit
Tick size

1 kg
1 kg
Rs. Per 10gms
Re.1
In this scenario, the arbitrageur borrows Rs.81,53,885 at 8% per annum and buys 5 kgs of
gold in the spot market at Rs.. Pays 3885 as costs. (we assume Rs.310 as fixed cost per
deposit upto 500 kgs. and the variable storage costs are Rs.55 per kg per week for 13
weeks).
Simultaneously, sell 5 three-months gold futures contracts at Rs.8400000.
On the date of expiry, say the spot market rate is Rs.16,750 per 10gms. Sell the gold for
Rs.83,75,000.
The futures will expire with a profit of Rs. 25000 ( Rs.16800-16750 per 10gms for 5
contracts)
From Rs. 84,00,000 in hand, return the borrowed amount plus interest of Rs.163077.
The result is a profit of Rs.83,037
If the commodity futures are underpriced
Page 53

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Assume that the gold is trading at Rs.16300 per 10gms in the spot market at Ahmedabed on
10th April 2010. On the same date the three month futures is trading at Rs.16400 per 10gms and
seems overpriced.
In this scenario, the arbitrageur has to sell 5kgs of gold at Rs.16,300 per 10gms. The total
amount comes to Rs.81,50,000.
Invest Rs.81,50,000 and Rs.3885 at 8% interest per annum.
Buy three-months gold futures at NCDEX for Rs.82,00,000.
On the date of expiry the spot price and the futures price converge. Assume the gold price
is Rs. 16,500 per 10gms.
By this time, the sale proceeds of gold has grown to Rs.83,16,962 with an interest gain of
Rs.1,63,077.
The futures position will expire with a profit of Rs.50000 (16500-16400 for 10gms).
Buy back 5kgs of gold in the spot market for Rs.82,50,000 (Rs.16,500 per 10gms)
The result is a profit of Rs.1,16,962 (Rs.83,16,962 - 82,50,000 per 10gms = Rs.66962 +
50,000)
Page 54

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Analysis of agricultural products by using technical tool

Table 4.6
The NCDEX spot prices (in Rs.) from 1st April 2009 to 31st March 2010
Date
01-Apr-09
02-Apr-09
03-Apr-09
04-Apr-09
06-Apr-09
07-Apr-09
08-Apr-09
09-Apr-09
11-Apr-09
13-Apr-09
14-Apr-09
15-Apr-09
16-Apr-09
17-Apr-09
18-Apr-09
20-Apr-09
21-Apr-09
22-Apr-09
23-Apr-09
24-Apr-09
25-Apr-09
27-Apr-09
28-Apr-09
29-Apr-09
01-May-09
02-May-09
04-May-09
05-May-09
06-May-09
07-May-09
08-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
16-May-09
18-May-09
Page 55
Chana
2346
2381
2427
2497
2540
2540
2528
2574
2561
2554
2554
2528
2540
2590
2608
2576
2598
2634
2636
2603
2589
2512
2515
2521
2521
2545
2502
2482
2483
2488
2462
2467
2460
2451
2428
2428
2461
2440
Maize
848
855.5
869
867.5
869.5
869.5
868
868
889
874
874
874.5
881.5
881
883
887
883
916
908
893
888
866
853
849.5
849.5
877
878.5
867.5
862.5
867.5
857.5
860
862.5
860.5
856
860
866.5
850
Soybean
2363.5
2422.5
2443.5
2482.5
2532
2532
2541.5
2601
2637.5
2580.5
2580.5
2649.5
2625
2727.5
2747.5
2733.5
2801.5
2879
2867.5
2822.5
2753
2643
2634
2654
2654
2760.5
2840.5
2819
2798.5
2799
2754
2717.5
2743.5
2759
2724
2738
2746
2695
Turmeric
5502
5513
5586
5627
5575
5575
5457
5425
5611
5646
5646
5639
5414
5342
5131
5337
5334
5451
5394
5249
5312
5138
5129
5200
5200
5361
5456
5436
5507
5480
5452
5274
5417
5361
5415
5357
5395
5441

products
19-May-09
20-May-09
21-May-09
22-May-09
23-May-09
25-May-09
26-May-09
27-May-09
28-May-09
29-May-09
30-May-09
01-Jun-09
02-Jun-09
03-Jun-09
04-Jun-09
05-Jun-09
06-Jun-09
08-Jun-09
09-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
13-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
20-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09
26-Jun-09
27-Jun-09
29-Jun-09
30-Jun-09
01-Jul-09
02-Jul-09
03-Jul-09
04-Jul-09
06-Jul-09
07-Jul-09
08-Jul-09
09-Jul-09
10-Jul-09
11-Jul-09
13-Jul-09
14-Jul-09
15-Jul-09
16-Jul-09
17-Jul-09
18-Jul-09
Page 56
2416
2419
2383
2345
2261
2266
2267
2304
2274
2291
2394
2373
2380
2384
2339
2310
2322
2338
2338
2351
2370
2381
2369
2332
2344
2333
2317
2305
2296
2311
2307
2342
2342
2325
2322
2363
2359
2356
2366
2366
2371
2366
2408
2425
2459
2531
2606
2612
2660
2588
2562
2564
2548
857.5
870.5
971
938
938
938
964.5
961
933
950
932.5
940
961.5
961.5
961.5
960
960
960
960
975.5
994
998.5
989
977
973
991
981.5
963
968.5
966.5
942.5
959.5
940
927
927
935
928.5
928.5
925
923.5
923.5
923.5
923.5
924
929.5
943.5
927
948
945
947.5
951
946
940
2696.5
2697.5
2623
2629.5
2551.5
2568.5
2565.5
2659
2638.5
2615
2616.5
2615.5
2638
2628.5
2629
2639.5
2634.5
2621.5
2619.5
2619.5
2657.5
2671.5
2634
2585.5
2572
2535.5
2514.5
2511.5
2457
2422
2424
2501.5
2516.5
2529.5
2521.5
2487.5
2474.5
2471.5
2460.5
2447
2452.5
2375
2364.5
2270
2220
2186
2196
2191.5
2219
2252.5
2231.5
2237
2256.5
5447
5450
5582
5422
5206
5063
5011
5099
4896
4862
4979
4976
4959
5062
4978
4992
5026
5028
5178
5282
5393
5292
5338
5444
5385
5170
5040
5107
5052
5185
5119
5174
5171
5158
5152
5131
5186
5171
5150
5137
5169
5129
5226
5191
5290
5346
5453
5664
5695
5468
5351
5539
5405

products
20-Jul-09
21-Jul-09
22-Jul-09
23-Jul-09
24-Jul-09
25-Jul-09
27-Jul-09
28-Jul-09
29-Jul-09
30-Jul-09
31-Jul-09
01-Aug-09
03-Aug-09
04-Aug-09
05-Aug-09
06-Aug-09
07-Aug-09
08-Aug-09
10-Aug-09
11-Aug-09
12-Aug-09
13-Aug-09
14-Aug-09
17-Aug-09
18-Aug-09
19-Aug-09
20-Aug-09
21-Aug-09
22-Aug-09
24-Aug-09
25-Aug-09
26-Aug-09
27-Aug-09
28-Aug-09
29-Aug-09
31-Aug-09
01-Sep-09
02-Sep-09
03-Sep-09
04-Sep-09
05-Sep-09
07-Sep-09
08-Sep-09
09-Sep-09
10-Sep-09
11-Sep-09
12-Sep-09
14-Sep-09
15-Sep-09
16-Sep-09
17-Sep-09
18-Sep-09
19-Sep-09
Page 57
2596
2589
2564
2557
2531
2602
2580
2558
2527
2496
2562
2537
2576
2572
2580
2590
2668
2658
2676
2602
2536
2572
2521
2542
2517
2417
2485
2523
2490
2461
2434
2360
2389
2418
2395
2341
2386
2425
2396
2405
2398
2440
2420
2369
2378
2324
2328
2328
2280
2297
2318
2303
2318
939.5
944
937.5
933.5
940
931.5
919.5
919.5
916
910.5
922.5
932.5
946
947.5
952.5
949
984.5
988
1021.5
1006.5
987
988.5
992.5
991
994
989
995.5
991.5
992
988.5
983
980
976.5
976
977
970.5
966
966
963
957.5
961
957
962
954.5
947.5
944.5
943
939.5
935
931.5
927.5
937
893.5
2262
2185
2178
2172
2155.5
2123.5
2064
2081
2060.5
2085.5
2163.5
2204
2292.5
2263
2313.5
2285
2319.5
2307
2290.5
2286.5
2222
2274.5
2261
2202.5
2209
2205.5
2190.5
2229
2243
2229
2216
2183.5
2150
2146.5
2146.5
2118
2145.5
2114.5
2108
2071
1991.5
2033
2052.5
2003.5
2000.5
1995.5
1945.5
1939.5
1936.5
1976.5
1960.5
1951
1934
5572
5705
5726
5758
5824
5866
6017
5929
6118
6256
6433
6474
6733
7003
7176
7012
7293
7541
7843
8045
7881
7966
7648
7800
7717
8026
7981
7271
7077
7051
7028
6918
6919
7037
7229
7133
7154
7323
7436
7262
7175
7245
7275
7153
6876
7021
7253
7299
7257
7242
7316
7220
7212

products
21-Sep-09
22-Sep-09
23-Sep-09
24-Sep-09
25-Sep-09
26-Sep-09
28-Sep-09
29-Sep-09
30-Sep-09
01-Oct-09
03-Oct-09
05-Oct-09
06-Oct-09
07-Oct-09
08-Oct-09
09-Oct-09
10-Oct-09
12-Oct-09
13-Oct-09
14-Oct-09
15-Oct-09
16-Oct-09
17-Oct-09
19-Oct-09
20-Oct-09
21-Oct-09
22-Oct-09
23-Oct-09
24-Oct-09
26-Oct-09
27-Oct-09
28-Oct-09
29-Oct-09
30-Oct-09
31-Oct-09
02-Nov-09
03-Nov-09
04-Nov-09
05-Nov-09
06-Nov-09
07-Nov-09
09-Nov-09
10-Nov-09
11-Nov-09
12-Nov-09
13-Nov-09
14-Nov-09
16-Nov-09
17-Nov-09
18-Nov-09
19-Nov-09
20-Nov-09
21-Nov-09
Page 58
2318
2379
2339
2333
2349
2353
2353
2297
2305
2291
2318
2321
2311
2298
2264
2242
2252
2235
2235
2248
2276
2294
2310
2310
2254
2480
2525
2539
2572
2601
2568
2549
2571
2561
2630
2630
2652
2673
2700
2723
2702
2617
2654
2650
2618
2617
2578
2619
2629
2681
2690
2660
2611
893.5
904
905.5
902.5
903
904
904
904.5
906.5
900
907
918
909
909
906.5
900.5
901.5
903
903
907.5
913
915
917
917
925
941
958
969.5
971.5
980
989
988.5
991.5
999
1020.5
1020.5
1024
1012.5
1016
1018.5
1011
993
991.5
998.5
997.5
998.5
995.5
990
985.5
991.5
994
988.5
1001
1934
1949.5
1948
1950.5
2018
2051.5
2051.5
2020.5
2018
2028
1996
2008
2001.5
1988
1968.5
1996.5
2047.5
2068.5
2068.5
2099.5
2074.5
2089
2092
2092
2064
2036.5
2061
2103.5
2150
2195
2184.5
2160
2188.5
2209
2230
2230
2259.5
2288.5
2303.5
2317
2333
2305
2290.5
2267.5
2264.5
2270
2261.5
2270
2289
2337.5
2332
2313
2494.5
7212
7425
7339
7372
7337
7364
7364
7360
7437
7406
7380
7489
7560
7670
7854
7813
7870
8185
8185
8513
8854
8500
8453
8453
8591
8863
9218
9371
9510
9891
9904
10301
10630
10476
10736
10736
11166
11581
11217
11666
11877
11956
12435
12881
12812
12630
12916
13433
13571
13029
12806
12811
7219

products
23-Nov-09
24-Nov-09
25-Nov-09
26-Nov-09
27-Nov-09
30-Nov-09
01-Dec-09
02-Dec-09
03-Dec-09
04-Dec-09
05-Dec-09
07-Dec-09
08-Dec-09
09-Dec-09
10-Dec-09
11-Dec-09
12-Dec-09
14-Dec-09
15-Dec-09
16-Dec-09
17-Dec-09
18-Dec-09
19-Dec-09
21-Dec-09
22-Dec-09
23-Dec-09
24-Dec-09
26-Dec-09
28-Dec-09
29-Dec-09
30-Dec-09
31-Dec-09
01-Jan-10
02-Jan-10
04-Jan-10
05-Jan-10
06-Jan-10
07-Jan-10
08-Jan-10
09-Jan-10
11-Jan-10
12-Jan-10
13-Jan-10
14-Jan-10
15-Jan-10
16-Jan-10
18-Jan-10
19-Jan-10
20-Jan-10
21-Jan-10
22-Jan-10
23-Jan-10
25-Jan-10
Page 59
2632
2630
2652
2652
2611
2638
2612
2626
2585
2553
2536
2524
2508
2477
2454
2499
2499
2469
2434
2426
2431
2405
2713
2637
2626
2604
2605
2631
2633
2614
2612
2604
2596
2565
2534
2555
2528
2501
2508
2494
2494
2498
2542
2492
2512
2522
2490
2432
2434
2372
2361
2382
2300
1008.5
1004.5
996
998
987.5
1001.5
997.5
998
994
990.5
988
986
975
970.5
970.5
980
978
972
970.5
975
975
964.5
1040
1036
1022.5
1013
1024.5
1025
1022.5
997
998
963
973
972
974
968.5
967.5
967
968.5
972.5
971
967
959.5
950
950.5
935.5
936.5
929
936.5
947.5
940
948.5
944.5
2526
2532
2541
2522
2482.5
2533
2545
2528.5
2492
2507.5
2511.5
2497.5
2488.5
2468.5
2447.5
2471
2497.5
2484.5
2488
2510
2507.5
2476
2447.5
2402.5
2339
2339
2390.5
2411.5
2408.5
2393
2379.5
2392.5
2388.5
2395.5
2405
2385.5
2369
2316
2323
2309.5
2288.5
2248.5
2252.5
2247
2231
2197
2240.5
2212.5
2212
2195
2173.5
2183
2162
6931
6654
6855
7130
7381
7606
7302
7010
6883
7023
6881
7157
7355
7322
7354
7169
7204
7016
6999
7279
7051
6916
7055
7061
7008
7090
7122
7136
7286
7353
7471
7395
7398
7680
7796
7587
7376
7362
7566
7546
7510
7405
7392
7317
7284
7101
7014
6734
6684
6735
6775
6836
6989

products
27-Jan-10
28-Jan-10
29-Jan-10
30-Jan-10
01-Feb-10
02-Feb-10
03-Feb-10
04-Feb-10
05-Feb-10
06-Feb-10
08-Feb-10
09-Feb-10
10-Feb-10
11-Feb-10
12-Feb-10
13-Feb-10
15-Feb-10
16-Feb-10
17-Feb-10
18-Feb-10
19-Feb-10
20-Feb-10
22-Feb-10
23-Feb-10
24-Feb-10
25-Feb-10
26-Feb-10
27-Feb-10
01-Mar-10
02-Mar-10
03-Mar-10
04-Mar-10
05-Mar-10
06-Mar-10
08-Mar-10
09-Mar-10
10-Mar-10
11-Mar-10
12-Mar-10
13-Mar-10
15-Mar-10
16-Mar-10
17-Mar-10
18-Mar-10
19-Mar-10
20-Mar-10
22-Mar-10
23-Mar-10
24-Mar-10
25-Mar-10
26-Mar-10
27-Mar-10
29-Mar-10
Page 60
2257
2238
2263
2249
2264
2296
2286
2302
2338
2302
2318
2304
2305
2304
2304
2312
2278
2247
2233
2193
2189
2181
2160
2124
2091
2125
2151
2158
2158
2094
2110
2131
2145
2172
2131
2123
2143
2135
2157
2154
2149
2123
2107
2102
2092
2188
2182
2244
2246
2288
2286
2334
2342
932.5
925
908
908
903
911
912
908
894
897
895.5
896.5
901
912.5
912.5
907.5
901.5
897.5
887
868
883
876
867.5
868.5
865
863
864.5
867
867
857
860.5
864
863
867.5
866.5
871.5
880.5
882.5
877
882.5
870
872.5
874
866
887
882.5
883
892
885
879.5
881
880.5
880.5
2135.5
2092
2088
2052
2066
2085.5
2130
2096.5
2101.5
2099.5
2135
2154
2150
2172
2172
2165.5
2138.5
2149.5
2139.5
2099.5
2083.5
2085
2122.5
2117.5
2087
2073.5
2072.5
2085
2085
2083.5
2113.5
2138
2119
2118.5
2114.5
2083
2077
2091.5
2057
2027.5
2023
2032
2044
2055.5
2106.5
2006
2018
2055.5
2015
2041
2025.5
2048.5
2054
7082
7304
7235
6946
6888
6951
6895
6999
6902
6809
6787
7059
7138
7035
7035
7164
7151
7438
7428
7418
7482
7447
7481
7490
7678
7568
7592
7586
7586
7890
8022
8112
8437
8775
9126
8829
9183
9551
9934
9648
10034
10436
10854
10692
11120
11565
11103
11358
10904
10820
11253
10842
10648

products
30-Mar-10
31-Mar-10
2308
2289
880.5
868.5
2059
2038
10567
10932
Chart 4.1
Line chart of Chana
Bearis
h
Analysis:
The price of Chana has shown many fluctuations over three months. The closing price on 1st
January 2010 was Rs.2596 a quintal. The prices on 31st March ended at Rs.2289 per quintal with
a loss of Rs. 307 a quintal compared to price on 1st January 2010.
Interpretation:
From the above analysis one can conclude that the trend of Chana is bearish. Therefore the
investors have to hold till the trend turns to bullish.
Page 61

products
Chart 4.2
Line chart of Maize
Bearish
Analysis:
On 1st January 2010, the price of Maize was Rs.973 per quintal. On 31 st march the price was
Rs.868.5 a quintal. The price show a loss of Rs.104.5 a quintal compared to the price on 1 st
January. The maize has made a loss of 10.73% over three months.
Interpretation:
The analysis shows that the investor should hold until the trend turns bearish.
Page 62

products
Chart 4.3
Line chart of Soybean
Bearish
Analysis:
The price of Soybean had seen many fluctuations during the three months. The price on 1 st
January 2010 was Rs.2388 a quintal. The prices on 31 st march 2010 ended at Rs.2038 with a loss
of Rs.350 per quintal compared to the price on 1 st January. The Soybean has made a loss of
14.65% over the three months.
Interpretation:
By the above analysis one can conclude that the trend of Soybean is bearish.
Page 63

products
Chart 4.4
Line chart of Turmeric
Bullish
Analysis:
The price of Turmeric has risen steadily from the month of January to March of 2010. On 1 st
January the price was Rs.7398 a quintal. On 31 st March the price was Rs.10932 a quintal which
was high by Rs.3534 a quintal compared to price on January 1 st. the turmeric has earned 32.32%
over three months.
Interpretation:
From the above analysis one can conclude that the trend of Turmeric is Bullish.
Page 64

products
Table 4.7
Example showing computation of simple moving average for Short term, Medium term
and Long term by using the prices of Chana
Date
01-Apr-09
02-Apr-09
03-Apr-09
04-Apr-09
06-Apr-09
07-Apr-09
08-Apr-09
09-Apr-09
11-Apr-09
13-Apr-09
14-Apr-09
15-Apr-09
16-Apr-09
17-Apr-09
18-Apr-09
20-Apr-09
21-Apr-09
22-Apr-09
23-Apr-09
24-Apr-09
25-Apr-09
27-Apr-09
28-Apr-09
29-Apr-09
01-May-09
Close
Price
2346
2381
2427
2497
2540
2540
2528
2574
2561
2554
2554
2528
2540
2590
2608
2576
2598
2634
2636
2603
2589
2512
2515
2521
2521
Page 65
50 Day
Sum
Average
100 Day
Sum
Average
200 Day sum
Average

products
02-May-09
04-May-09
05-May-09
06-May-09
07-May-09
08-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
16-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
23-May-09
25-May-09
26-May-09
27-May-09
28-May-09
29-May-09
30-May-09
01-Jun-09
02-Jun-09
03-Jun-09
04-Jun-09
05-Jun-09
06-Jun-09
08-Jun-09
09-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
13-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
20-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09
26-Jun-09
27-Jun-09
29-Jun-09
30-Jun-09
01-Jul-09
02-Jul-09
03-Jul-09
2545
2502
2482
2483
2488
2462
2467
2460
2451
2428
2428
2461
2440
2416
2419
2383
2345
2261
2266
2267
2304
2274
2291
2394
2373
2380
2384
2339
2310
2322
2338
2338
2351
2370
2381
2369
2332
2344
2333
2317
2305
2296
2311
2307
2342
2342
2325
2322
2363
2359
2356
2366
2366
Page 66
123563
123597
123600
123512
123325
123107
122905
122715
122492
122301
122128
121943
121747
121551
121294
121003
120732
120430
120107
119778
119517
119270
119083
118890
118732
118570
118381
118245
118129
2471.26
2471.94
2472
2470.24
2466.5
2462.14
2458.1
2454.3
2449.84
2446.02
2442.56
2438.86
2434.94
2431.02
2425.88
2420.06
2414.64
2408.6
2402.14
2395.56
2390.34
2385.4
2381.66
2377.8
2374.64
2371.4
2367.62
2364.9
2362.58

products
04-Jul-09
06-Jul-09
07-Jul-09
08-Jul-09
09-Jul-09
10-Jul-09
11-Jul-09
13-Jul-09
14-Jul-09
15-Jul-09
16-Jul-09
17-Jul-09
18-Jul-09
20-Jul-09
21-Jul-09
22-Jul-09
23-Jul-09
24-Jul-09
25-Jul-09
27-Jul-09
28-Jul-09
29-Jul-09
30-Jul-09
31-Jul-09
01-Aug-09
03-Aug-09
04-Aug-09
05-Aug-09
06-Aug-09
07-Aug-09
08-Aug-09
10-Aug-09
11-Aug-09
12-Aug-09
13-Aug-09
14-Aug-09
17-Aug-09
18-Aug-09
19-Aug-09
20-Aug-09
21-Aug-09
22-Aug-09
24-Aug-09
25-Aug-09
26-Aug-09
27-Aug-09
28-Aug-09
29-Aug-09
31-Aug-09
01-Sep-09
02-Sep-09
03-Sep-09
04-Sep-09
2371
2366
2408
2425
2459
2531
2606
2612
2660
2588
2562
2564
2548
2596
2589
2564
2557
2531
2602
2580
2558
2527
2496
2562
2537
2576
2572
2580
2590
2668
2658
2676
2602
2536
2572
2521
2542
2517
2417
2485
2523
2490
2461
2434
2360
2389
2418
2395
2341
2386
2425
2396
2405
Page 67
118017
117895
117841
117799
117798
117878
118056
118240
118439
118587
118733
118878
119043
119294
119622
119920
120210
120437
120765
121054
121218
121372
121488
121666
121864
122130
122380
122622
122874
123191
123479
123774
124007
124211
124439
124627
124852
125064
125185
125359
125575
125723
125842
125951
125989
126015
126074
126113
126088
126108
126162
126192
126189
2360.34
2357.9
2356.82
2355.98
2355.96
2357.56
2361.12
2364.8
2368.78
2371.74
2374.66
2377.56
2380.86
2385.88
2392.44
2398.4
2404.2
2408.74
2415.3
2421.08
2424.36
2427.44
2429.76
2433.32
2437.28
2442.6
2447.6
2452.44
2457.48
2463.82
2469.58
2475.48
2480.14
2484.22
2488.78
2492.54
2497.04
2501.28
2503.7
2507.18
2511.5
2514.46
2516.84
2519.02
2519.78
2520.3
2521.48
2522.26
2521.76
2522.16
2523.24
2523.84
2523.78
6131743
6253231
6374897
6496761
6618891
6741271
6863893
6986767
7109958
7233437
7357211
7481218
7605429
7729868
7854495
7979347
8104411
8229596
8354955
8480530
8606253
8732095
8858046
8984035
9110050
9236124
9362237
9488325
9614433
9740595
9866787
9992976
61317.43
62532.31
63748.97
64967.61
66188.91
67412.71
68638.93
69867.67
71099.58
72334.37
73572.11
74812.18
76054.29
77298.68
78544.95
79793.47
81044.11
82295.96
83549.55
84805.3
86062.53
87320.95
88580.46
89840.35
91100.5
92361.24
93622.37
94883.25
96144.33
97405.95
98667.87
99929.76

products
05-Sep-09
07-Sep-09
08-Sep-09
09-Sep-09
10-Sep-09
11-Sep-09
12-Sep-09
14-Sep-09
15-Sep-09
16-Sep-09
17-Sep-09
18-Sep-09
19-Sep-09
21-Sep-09
22-Sep-09
23-Sep-09
24-Sep-09
25-Sep-09
26-Sep-09
28-Sep-09
29-Sep-09
30-Sep-09
01-Oct-09
03-Oct-09
05-Oct-09
06-Oct-09
07-Oct-09
08-Oct-09
09-Oct-09
10-Oct-09
12-Oct-09
13-Oct-09
14-Oct-09
15-Oct-09
16-Oct-09
17-Oct-09
19-Oct-09
20-Oct-09
21-Oct-09
22-Oct-09
23-Oct-09
24-Oct-09
26-Oct-09
27-Oct-09
28-Oct-09
29-Oct-09
30-Oct-09
31-Oct-09
02-Nov-09
03-Nov-09
04-Nov-09
05-Nov-09
06-Nov-09
2398
2440
2420
2369
2378
2324
2328
2328
2280
2297
2318
2303
2318
2318
2379
2339
2333
2349
2353
2353
2297
2305
2291
2318
2321
2311
2298
2264
2242
2252
2235
2235
2248
2276
2294
2310
2310
2254
2480
2525
2539
2572
2601
2568
2549
2571
2561
2630
2630
2652
2673
2700
2723
Page 68
126162
126143
126032
125795
125561
125225
124965
124731
124447
124196
123918
123632
123386
123147
122995
122732
122485
122276
122102
121959
121694
121462
121177
120923
120664
120385
120015
119621
119187
118837
118536
118199
117926
117660
117437
117330
117155
116886
116876
116940
117045
117257
117469
117619
117773
118003
118178
118383
118617
118864
119139
119399
119702
2523.24
2522.86
2520.64
2515.9
2511.22
2504.5
2499.3
2494.62
2488.94
2483.92
2478.36
2472.64
2467.72
2462.94
2459.9
2454.64
2449.7
2445.52
2442.04
2439.18
2433.88
2429.24
2423.54
2418.46
2413.28
2407.7
2400.3
2392.42
2383.74
2376.74
2370.72
2363.98
2358.52
2353.2
2348.74
2346.6
2343.1
2337.72
2337.52
2338.8
2340.9
2345.14
2349.38
2352.38
2355.46
2360.06
2363.56
2367.66
2372.34
2377.28
2382.78
2387.98
2394.04
10119138
10245281
10371313
10497108
10622669
10747894
10872859
10997590
11122037
11246233
11370151
11493783
11617169
11740316
11863311
11986043
12108528
12230804
12229343
12227705
12225799
12223749
12221601
12219417
12217176
12214846
12212369
12209689
12206748
12203642
12200431
12197079
12193711
12190368
12187073
12183973
12181021
12178129
12175488
12173158
12171120
12169487
12168224
12167273
12166665
12166423
12166472
12166838
12167560
12168583
12169923
12171524
12173348
101191.38
102452.81
103713.13
104971.08
106226.69
107478.94
108728.59
109975.9
111220.37
112462.33
113701.51
114937.83
116171.69
117403.16
118633.11
119860.43
121085.28
122308.04
122293.43
122277.05
122257.99
122237.49
122216.01
122194.17
122171.76
122148.46
122123.69
122096.89
122067.48
122036.42
122004.31
121970.79
121937.11
121903.68
121870.73
121839.73
121810.21
121781.29
121754.88
121731.58
121711.2
121694.87
121682.24
121672.73
121666.65
121664.23
121664.72
121668.38
121675.6
121685.83
121699.23
121715.24
121733.48

products
07-Nov-09
09-Nov-09
10-Nov-09
11-Nov-09
12-Nov-09
13-Nov-09
14-Nov-09
16-Nov-09
17-Nov-09
18-Nov-09
19-Nov-09
20-Nov-09
21-Nov-09
23-Nov-09
24-Nov-09
25-Nov-09
26-Nov-09
27-Nov-09
30-Nov-09
01-Dec-09
02-Dec-09
03-Dec-09
04-Dec-09
05-Dec-09
07-Dec-09
08-Dec-09
09-Dec-09
10-Dec-09
11-Dec-09
12-Dec-09
14-Dec-09
15-Dec-09
16-Dec-09
17-Dec-09
18-Dec-09
19-Dec-09
21-Dec-09
22-Dec-09
23-Dec-09
24-Dec-09
26-Dec-09
28-Dec-09
29-Dec-09
30-Dec-09
31-Dec-09
01-Jan-10
02-Jan-10
04-Jan-10
05-Jan-10
06-Jan-10
07-Jan-10
08-Jan-10
09-Jan-10
2702
2617
2654
2650
2618
2617
2578
2619
2629
2681
2690
2660
2611
2632
2630
2652
2652
2611
2638
2612
2626
2585
2553
2536
2524
2508
2477
2454
2499
2499
2469
2434
2426
2431
2405
2713
2637
2626
2604
2605
2631
2633
2614
2612
2604
2596
2565
2534
2555
2528
2501
2508
2494
Page 69
120035
120274
120604
120926
121216
121553
121834
122135
122461
122824
123196
123477
123749
124048
124329
124628
124927
125241
125574
125895
126203
126467
126709
126947
127207
127473
127698
127917
128181
128432
128625
128765
128881
129002
129153
129386
129498
129585
129617
129621
129684
129768
129811
129862
129836
129802
129715
129576
129431
129236
129035
128926
128766
2400.7
2405.48
2412.08
2418.52
2424.32
2431.06
2436.68
2442.7
2449.22
2456.48
2463.92
2469.54
2474.98
2480.96
2486.58
2492.56
2498.54
2504.82
2511.48
2517.9
2524.06
2529.34
2534.18
2538.94
2544.14
2549.46
2553.96
2558.34
2563.62
2568.64
2572.5
2575.3
2577.62
2580.04
2583.06
2587.72
2589.96
2591.7
2592.34
2592.42
2593.68
2595.36
2596.22
2597.24
2596.72
2596.04
2594.3
2591.52
2588.62
2584.72
2580.7
2578.52
2575.32
12175327
12177361
12179526
12181865
12184348
12187023
12189814
12192655
12195494
12198398
12201384
12204424
12207408
12210402
12213513
12216769
12220208
12223783
12227493
12231258
12235081
12238926
12242761
12246517
12250245
12253944
12257635
12261341
12265083
12268888
12272661
12276362
12280058
12283701
12287279
12290942
12294598
12298232
12301860
12305466
12309076
12312731
12316454
12320208
12323882
12327492
12331018
12334432
12337720
12340924
12344164
12347529
12351070
121753.27
121773.61
121795.26
121818.65
121843.48
121870.23
121898.14
121926.55
121954.94
121983.98
122013.84
122044.24
122074.08
122104.02
122135.13
122167.69
122202.08
122237.83
122274.93
122312.58
122350.81
122389.26
122427.61
122465.17
122502.45
122539.44
122576.35
122613.41
122650.83
122688.88
122726.61
122763.62
122800.58
122837.01
122872.79
122909.42
122945.98
122982.32
123018.6
123054.66
123090.76
123127.31
123164.54
123202.08
123238.82
123274.92
123310.18
123344.32
123377.2
123409.24
123441.64
123475.29
123510.7
1080613758
1092833966
1105057749
1117285242
1129516500
1141751581
1153990507
1166233268
1178479785
1190730030
1202983974
1215241609
1227502950
1239768033
1252036921
1264309582
1276585944
1288866002
1301149703
1313436982
1325727924
1338022522
1350320754
1362622614
1374928080
1387237156
1399549887
1411866341
1424186549
1436510431
1448837923
1461168941
1473503373
1485841093
1498182017
1510526181
1522873710
1535224780
5403068.79
5464169.83
5525288.745
5586426.21
5647582.5
5708757.905
5769952.535
5831166.34
5892398.925
5953650.15
6014919.87
6076208.045
6137514.75
6198840.165
6260184.605
6321547.91
6382929.72
6444330.01
6505748.515
6567184.91
6628639.62
6690112.61
6751603.77
6813113.07
6874640.4
6936185.78
6997749.435
7059331.705
7120932.745
7182552.155
7244189.615
7305844.705
7367516.865
7429205.465
7490910.085
7552630.905
7614368.55
7676123.9

products
11-Jan-10
12-Jan-10
13-Jan-10
14-Jan-10
15-Jan-10
16-Jan-10
18-Jan-10
19-Jan-10
20-Jan-10
21-Jan-10
22-Jan-10
23-Jan-10
25-Jan-10
27-Jan-10
28-Jan-10
29-Jan-10
30-Jan-10
01-Feb-10
02-Feb-10
03-Feb-10
04-Feb-10
05-Feb-10
06-Feb-10
08-Feb-10
09-Feb-10
10-Feb-10
11-Feb-10
12-Feb-10
13-Feb-10
15-Feb-10
16-Feb-10
17-Feb-10
18-Feb-10
19-Feb-10
20-Feb-10
22-Feb-10
23-Feb-10
24-Feb-10
25-Feb-10
26-Feb-10
27-Feb-10
01-Mar-10
02-Mar-10
03-Mar-10
04-Mar-10
05-Mar-10
06-Mar-10
08-Mar-10
09-Mar-10
10-Mar-10
11-Mar-10
12-Mar-10
13-Mar-10
2494
2498
2542
2492
2512
2522
2490
2432
2434
2372
2361
2382
2300
2257
2238
2263
2249
2264
2296
2286
2302
2338
2302
2318
2304
2305
2304
2304
2312
2278
2247
2233
2193
2189
2181
2160
2124
2091
2125
2151
2158
2158
2094
2110
2131
2145
2172
2131
2123
2143
2135
2157
2154
Page 70
128610
128490
128415
128329
128222
128115
127924
127666
127440
127201
126930
126682
126330
125935
125562
125187
124824
124462
124173
123906
123672
123486
123280
123121
122971
122777
122582
122417
122295
122147
121963
121791
121271
120823
120378
119934
119453
118913
118405
117942
117488
117042
116540
116085
115682
115272
114916
114546
114161
113810
113451
113110
112722
2572.2
2569.8
2568.3
2566.58
2564.44
2562.3
2558.48
2553.32
2548.8
2544.02
2538.6
2533.64
2526.6
2518.7
2511.24
2503.74
2496.48
2489.24
2483.46
2478.12
2473.44
2469.72
2465.6
2462.42
2459.42
2455.54
2451.64
2448.34
2445.9
2442.94
2439.26
2435.82
2425.42
2416.46
2407.56
2398.68
2389.06
2378.26
2368.1
2358.84
2349.76
2340.84
2330.8
2321.7
2313.64
2305.44
2298.32
2290.92
2283.22
2276.2
2269.02
2262.2
2254.44
12354715
12358474
12362442
12366575
12370879
12375362
12379900
12384419
12388864
12393333
12397778
12402184
12406412
12410388
12414256
12417981
12421628
12425167
12428676
12432197
12435854
12439719
12443812
12448096
12452531
12457109
12461765
12466522
12471380
12476197
12481005
12485910
12490305
12494188
12497521
12500198
12502182
12503476
12504108
12504047
12503357
12502016
12499939
12497160
12493703
12489576
12484790
12479301
12473188
12466394
12458919
12450813
12441982
123547.15
123584.74
123624.42
123665.75
123708.79
123753.62
123799
123844.19
123888.64
123933.33
123977.78
124021.84
124064.12
124103.88
124142.56
124179.81
124216.28
124251.67
124286.76
124321.97
124358.54
124397.19
124438.12
124480.96
124525.31
124571.09
124617.65
124665.22
124713.8
124761.97
124810.05
124859.1
124903.05
124941.88
124975.21
125001.98
125021.82
125034.76
125041.08
125040.47
125033.57
125020.16
124999.39
124971.6
124937.03
124895.76
124847.9
124793.01
124731.88
124663.94
124589.19
124508.13
124419.82
1547579495
1559937969
1572300411
1584666986
1597037865
1609413227
1621793127
1634177546
1646566410
1658959743
1671357521
1683759705
1696166117
1708576505
1720990761
1733408742
1745830370
1758255537
1770684213
1783116410
1795552264
1807991983
1820435795
1832883891
1845336422
1857793531
1870255296
1882721818
1895193198
1907669395
1920150400
1932636310
1945126615
1957620803
1970118324
1982618522
1995120704
2007624180
2020128288
2032632335
2045135692
2057637708
2070137647
2082634807
2095128510
2107618086
2120102876
2132582177
2145055365
2157521759
2169980678
2182431491
2194873473
7737897.475
7799689.845
7861502.055
7923334.93
7985189.325
8047066.135
8108965.635
8170887.73
8232832.05
8294798.715
8356787.605
8418798.525
8480830.585
8542882.525
8604953.805
8667043.71
8729151.85
8791277.685
8853421.065
8915582.05
8977761.32
9039959.915
9102178.975
9164419.455
9226682.11
9288967.655
9351276.48
9413609.09
9475965.99
9538346.975
9600752
9663181.55
9725633.075
9788104.015
9850591.62
9913092.61
9975603.52
10038120.9
10100641.44
10163161.68
10225678.46
10288188.54
10350688.24
10413174.04
10475642.55
10538090.43
10600514.38
10662910.89
10725276.83
10787608.8
10849903.39
10912157.46
10974367.37

products
15-Mar-10
16-Mar-10
17-Mar-10
18-Mar-10
19-Mar-10
20-Mar-10
22-Mar-10
23-Mar-10
24-Mar-10
25-Mar-10
26-Mar-10
27-Mar-10
29-Mar-10
30-Mar-10
31-Mar-10
2149
2123
2107
2102
2092
2188
2182
2244
2246
2288
2286
2334
2342
2308
2289
112379
111990
111575
111187
110847
110601
110411
110294
110158
110146
110175
110271
110350
110409
110434
2247.58
2239.8
2231.5
2223.74
2216.94
2212.02
2208.22
2205.88
2203.16
2202.92
2203.5
2205.42
2207
2208.18
2208.68
12432527
12422382
12411496
12399859
12387510
12374634
12361296
12347542
12333371
12318889
12304137
12289167
12273943
12258457
12242688
124325.27
124223.82
124114.96
123998.59
123875.1
123746.34
123612.96
123475.42
123333.71
123188.89
123041.37
122891.67
122739.43
122584.57
122426.88
2207306000
2219728382
2232139878
2244539737
2256927247
2269301881
2281663177
2294010719
2306344090
2312531236
2318582142
2324496412
2330273594
2335913160
2341414577
11036530
11098641.91
11160699.39
11222698.69
11284636.24
11346509.41
11408315.89
11470053.6
11531720.45
11562656.18
11592910.71
11622482.06
11651367.97
11679565.8
11707072.89
Chart 4.5
Long term moving average of Chana
Sel
Buy
Closing price
Moving average
Analysis:
When the price was Rs.2450 per quintal, in the month of December the price fell through the
flattening moving average line. The price fell upto Rs.2400 and started moving upwards through
Page 71

products
the moving average line. The investor should have bought at this level. Again in the month of
January the prices fell through the moving average line, when the price was Rs.2450. The
investor should have sold at this level.
Interpretation:
The investors have to hold as the closing prices fall below the moving average line. In the
chart one can observe that both the moving average line and price line are falling therefore the
investors have to hold.
Chart 4.6
Medium term moving average of Chana
Sell
Buy
Closing price
Analysis:
Page 72
Moving average

products
The 100 day moving average of Chana has provided the buy signals during October 2009 and
December 2009 when the prices were around Rs.2420 and Rs.2430 per quintal respectively. The
sell signals were generated during January 2010 and March 2010 when the prices were Rs.2500
and Rs.2350 respectively.
Interpretation:
The investor should hold now and should wait until the price line rises through the moving
average line so that he can buy. The price line is below the moving average line and the it is
showing a further fall. Therefore this is not the right time either to buy or to sell.
Chart 4.7
Short term moving average of Chana
Sell
Buy
Closing price
Analysis:
Page 73
Moving average

products
The 50 day, short term moving average generated several signals to buy. During July 2009,
when the price was around Rs.2350, during October 2009, when the price was around Rs.2300
and during March 2010 when the price was Rs.2200 per quintal. The sell signals were generated
during August 2009 and December 2009 when the price was Rs.2500 and Rs.2600 per quintal
respectively.
Interpretation:
The investor should hold and if the price line falls through the moving average line, one has to
sell. The investor can buy because the closing price line is above the moving average line and the
prices may move up.
Chart 4.8
Long term moving average of Maize
Sell
Closing price
Analysis:
Page 74
Moving average

products
The 200 day, long term moving average of maize has generated a sell signal during the month
of January 2010, when the prices were around Rs.970 per quintal. There were no buy signals
from past three months.
Interpretation:
The analysis of long term moving average suggests to hold. The investor can buy if the price
line moves upwards.
Chart 4.9
Medium term moving average of Maize
Sell
Buy
Closing price
Analysis:
Page 75
Moving average

products
The 100 day, medium term moving average has generated the signals to sell twice during
September 2009 and January 2010. The prices were around Rs.970 and Rs.980 per quintal
respectively. The buy signals were generated during August 2009, November 2009 and
December 2009 when the prices were around Rs.920, Rs.940, Rs.960 per quintal respectively.
Interpretation:
The investors should hold. The price line has fell below the moving average line and if the
price line moves up, the investor can buy.
Chart 4.10
Short term moving average of Maize
Sell
Buy
Closing price
Analysis:
Page 76
Moving average

products
The 50 day, short term moving average of Maize has provided signals to buy during the
months of August 2009 at a price around Rs.950, during October 2009 at around Rs.930 and
during December 2009 at a price around Rs.980 per quintal. The sell signals were provided
during September 2009 at a price around Rs.960 and during January 2010 at a price around
Rs.990 per quintal.
Interpretation:
From the above chart it is clear that that the investor has to sell Maize as the moving average
which is falling and the closing prices line which is falling intersects.
Chart 4.11
Long term moving average of Soybean
Sell
Buy
Closing price
Page 77
Moving average

products
Analysis:
The 200 day moving average has shown a signal to buy during December 2009, when the
prices were around Rs.2350 per quintal. The signal to sell has been generated during January
2010 when the prices were around Rs.2300 per quintal.
Interpretation:
From the chart one can interpret that the investors should hold. The investors can buy if the
prices move up. The price line as well as the moving average line is falling therefore it is better
to hold.
Chart 4.12
Medium term moving average of Soybean
Sell
Buy
Closing price
Page 78
Moving average

products
Analysis:
The 100 day medium term moving average had given the signal to buy during the months of
October 2009 when the prices were Rs.2150 per quintal. The sell signal was provided during
January 2010 when the prices were around Rs.2250 per quintal.
Interpretation:
The medium term moving average of Soybean is generating the signal to hold. The investors
should not sell or buy soybean.
Chart 4.13
Short term moving average of Soybean
Sell
Buy
Closing price
Page 79
Moving average

products
Analysis:
The 50 day short term moving average of Soy bean had signaled to buy during the month of
October 2009 when the prices were around Rs.2100 per quintal. The signals to sell were
generated during December 2009 and March 2010 when the prices were around Rs.2400 and
Rs.2100 per quintal respectively.
Interpretation:
The short term moving average of Soybean signals to hold as the price line remains below
moving average line. The investor can buy if the price line starts rising towards moving average
line.
Chart 4.14
Long term moving average of Turmeric
Sell
Buy
Closing price
Page 80
Moving average

products
Analysis:
The 200 day moving average generated the signal to sell in the month of January when the
price was around Rs.7000 per quintal. The buy signals were given during December 2009 and
March 2010 when the prices were around Rs. 7000 and Rs.7800 per quintal respectively.
Interpretation:
The investors can hold turmeric and look for selling if the price falls. As the price line is above
the moving average line the investors in turmeric can make good returns if they sell while the
price starts falling.
Chart 4.15
Medium term moving average of turmeric
Sell
Buy
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products
Closing price
Moving average
Analysis:
The 100 day moving average for medium term has given a sell signal during November 2009
when the price was around Rs.8500 per quintal. The buy signal was given during March 2010
when the price was around Rs.8000 per quintal.
Interpretation:
The price line lie above the moving average line, therefore the investors of Turmeric can hold.
If the price line falls towards the moving average line, the investors can sell.
Chart 4.16
Short term moving average of Turmeric
Sell
Buy
Page 82

products
Closing price
Moving average
Analysis:
Over the period of one year, the short term moving average has given a signal to sell in the
month of November when the prices were around Rs.10000 per quintal. The buy signal has been
given several times during July, October and February when the price was around Rs.5000 and
Rs.7000 and Rs.7000 per quintal respectively.
Interpretation:
From the above analysis, it is better to hold turmeric, because the price is above the moving
average line and the price line is falling towards the moving average line therefore the investor
can sell in the short term.
Table 4.8
Example showing the computation of Rate of Change by using the prices of Maize
Date
Close Price
01-Apr-09
848
02-Apr-09
855.5
03-Apr-09
869
04-Apr-09
867.5
06-Apr-09
869.5
07-Apr-09
869.5
08-Apr-09
868
09-Apr-09
868
Page 83

products
11-Apr-09
889
13-Apr-09
874
14-Apr-09
874
15-Apr-09
874.5
16-Apr-09
881.5
17-Apr-09
881
18-Apr-09
883
20-Apr-09
887
21-Apr-09
883
22-Apr-09
916
23-Apr-09
908
24-Apr-09
893
25-Apr-09
888
27-Apr-09
866
28-Apr-09
29-Apr-09
01-May-09
02-May-09
04-May-09
05-May-09
06-May-09
07-May-09
08-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
16-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
23-May-09
25-May-09
26-May-09
853
849.5
849.5
877
878.5
867.5
862.5
867.5
857.5
860
862.5
860.5
856
860
866.5
850
857.5
870.5
971
938
938
938
964.5
Page 84
Date
01-May-09
02-May-09
04-May-09
05-May-09
06-May-09
07-May-09
08-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
16-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
23-May-09
25-May-09
26-May-09
ROC
0.176886792
2.513150205
1.093210587
0
-0.80506038
-0.230017251
-1.209677419
-0.921658986
-2.98087739
-1.544622426
-2.059496568
-1.658090337
-1.701644923
-3.518728717
-2.88788222
-1.860202931
9.966024915
2.401746725
3.303964758
5.039193729
8.614864865

products
27-May-09
28-May-09
29-May-09
30-May-09
01-Jun-09
02-Jun-09
03-Jun-09
04-Jun-09
05-Jun-09
06-Jun-09
08-Jun-09
09-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
13-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
20-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09
26-Jun-09
27-Jun-09
29-Jun-09
30-Jun-09
01-Jul-09
02-Jul-09
03-Jul-09
04-Jul-09
06-Jul-09
07-Jul-09
08-Jul-09
09-Jul-09
10-Jul-09
11-Jul-09
13-Jul-09
14-Jul-09
15-Jul-09
16-Jul-09
17-Jul-09
18-Jul-09
20-Jul-09
21-Jul-09
22-Jul-09
23-Jul-09
24-Jul-09
25-Jul-09
27-Jul-09
Page 85
961
933
950
932.5
940
961.5
961.5
961.5
960
960
960
960
975.5
994
998.5
989
977
973
991
981.5
963
968.5
966.5
942.5
959.5
940
927
927
935
928.5
928.5
925
923.5
923.5
923.5
923.5
924
929.5
943.5
927
948
945
947.5
951
946
940
939.5
944
937.5
933.5
940
931.5
919.5
27-May-09
28-May-09
29-May-09
30-May-09
01-Jun-09
02-Jun-09
03-Jun-09
04-Jun-09
05-Jun-09
06-Jun-09
08-Jun-09
09-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
13-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
20-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09
26-Jun-09
27-Jun-09
29-Jun-09
30-Jun-09
01-Jul-09
02-Jul-09
03-Jul-09
04-Jul-09
06-Jul-09
07-Jul-09
08-Jul-09
09-Jul-09
10-Jul-09
11-Jul-09
13-Jul-09
14-Jul-09
15-Jul-09
16-Jul-09
17-Jul-09
18-Jul-09
20-Jul-09
21-Jul-09
22-Jul-09
23-Jul-09
24-Jul-09
25-Jul-09
27-Jul-09
10.96997691
9.37866354
11.83048852
9.770453208
7.183580388
9.447922595
10.83573487
11.47826087
10.66282421
11.95335277
11.62790698
11.30434783
13.36432307
16.12149533
16.10465116
14.1373341
14.94117647
13.46938776
13.84261918
1.081359423
2.665245203
3.251599147
3.038379531
-2.280974598
-0.156087409
0.750267953
-2.421052632
-0.589812332
-0.531914894
-3.432137285
-3.432137285
-3.796151846
-3.802083333
-3.802083333
-3.802083333
-3.802083333
-5.279343926
-6.488933602
-5.508262394
-6.268958544
-2.968270215
-2.877697842
-4.38950555
-3.107488538
-1.765316719
-2.942694889
-2.793585101
0.159151194
-2.292860865
-0.691489362
1.402373247
0.485436893
-1.657754011

products
28-Jul-09
29-Jul-09
30-Jul-09
31-Jul-09
01-Aug-09
03-Aug-09
04-Aug-09
05-Aug-09
06-Aug-09
07-Aug-09
08-Aug-09
10-Aug-09
11-Aug-09
12-Aug-09
13-Aug-09
14-Aug-09
17-Aug-09
18-Aug-09
19-Aug-09
20-Aug-09
21-Aug-09
22-Aug-09
24-Aug-09
25-Aug-09
26-Aug-09
27-Aug-09
28-Aug-09
29-Aug-09
31-Aug-09
01-Sep-09
02-Sep-09
03-Sep-09
04-Sep-09
05-Sep-09
07-Sep-09
08-Sep-09
09-Sep-09
10-Sep-09
11-Sep-09
12-Sep-09
14-Sep-09
15-Sep-09
16-Sep-09
17-Sep-09
18-Sep-09
19-Sep-09
21-Sep-09
22-Sep-09
23-Sep-09
24-Sep-09
25-Sep-09
26-Sep-09
28-Sep-09
Page 86
919.5
916
910.5
922.5
932.5
946
947.5
952.5
949
984.5
988
1021.5
1006.5
987
988.5
992.5
991
994
989
995.5
991.5
992
988.5
983
980
976.5
976
977
970.5
966
966
963
957.5
961
957
962
954.5
947.5
944.5
943
939.5
935
931.5
927.5
937
893.5
893.5
904
905.5
902.5
903
904
904
28-Jul-09
29-Jul-09
30-Jul-09
31-Jul-09
01-Aug-09
03-Aug-09
04-Aug-09
05-Aug-09
06-Aug-09
07-Aug-09
08-Aug-09
10-Aug-09
11-Aug-09
12-Aug-09
13-Aug-09
14-Aug-09
17-Aug-09
18-Aug-09
19-Aug-09
20-Aug-09
21-Aug-09
22-Aug-09
24-Aug-09
25-Aug-09
26-Aug-09
27-Aug-09
28-Aug-09
29-Aug-09
31-Aug-09
01-Sep-09
02-Sep-09
03-Sep-09
04-Sep-09
05-Sep-09
07-Sep-09
08-Sep-09
09-Sep-09
10-Sep-09
11-Sep-09
12-Sep-09
14-Sep-09
15-Sep-09
16-Sep-09
17-Sep-09
18-Sep-09
19-Sep-09
21-Sep-09
22-Sep-09
23-Sep-09
24-Sep-09
25-Sep-09
26-Sep-09
28-Sep-09
-0.969305331
-1.346257404
-1.567567568
-0.108283703
0.97455333
2.436383324
2.598808879
3.084415584
2.097902098
4.345521993
6.580366775
7.753164557
6.507936508
4.168865435
3.943217666
4.915433404
5.425531915
5.800957956
4.766949153
6.186666667
6.213176219
5.531914894
6.119162641
6.905927134
6.57966286
6.604803493
7.193849533
5.907859079
4.075067024
2.114164905
1.952506596
1.102362205
0.895679663
-2.386998476
-3.137651822
-5.824767499
-5.166418281
-4.002026342
-4.45118867
-4.987405542
-5.196770938
-5.935613682
-5.813953488
-6.830738322
-5.496722138
-9.929435484
-9.610520991
-8.036622584
-7.602040816
-7.578084997
-7.479508197
-7.47185261
-6.852138073

products
29-Sep-09
30-Sep-09
01-Oct-09
03-Oct-09
05-Oct-09
06-Oct-09
07-Oct-09
08-Oct-09
09-Oct-09
10-Oct-09
12-Oct-09
13-Oct-09
14-Oct-09
15-Oct-09
16-Oct-09
17-Oct-09
19-Oct-09
20-Oct-09
21-Oct-09
22-Oct-09
23-Oct-09
24-Oct-09
26-Oct-09
27-Oct-09
28-Oct-09
29-Oct-09
30-Oct-09
31-Oct-09
02-Nov-09
03-Nov-09
04-Nov-09
05-Nov-09
06-Nov-09
07-Nov-09
09-Nov-09
10-Nov-09
11-Nov-09
12-Nov-09
13-Nov-09
14-Nov-09
16-Nov-09
17-Nov-09
18-Nov-09
19-Nov-09
20-Nov-09
21-Nov-09
23-Nov-09
24-Nov-09
25-Nov-09
26-Nov-09
27-Nov-09
30-Nov-09
01-Dec-09
Page 87
904.5
906.5
900
907
918
909
909
906.5
900.5
901.5
903
903
907.5
913
915
917
917
925
941
958
969.5
971.5
980
989
988.5
991.5
999
1020.5
1020.5
1024
1012.5
1016
1018.5
1011
993
991.5
998.5
997.5
998.5
995.5
990
985.5
991.5
994
988.5
1001
1008.5
1004.5
996
998
987.5
1001.5
997.5
29-Sep-09
30-Sep-09
01-Oct-09
03-Oct-09
05-Oct-09
06-Oct-09
07-Oct-09
08-Oct-09
09-Oct-09
10-Oct-09
12-Oct-09
13-Oct-09
14-Oct-09
15-Oct-09
16-Oct-09
17-Oct-09
19-Oct-09
20-Oct-09
21-Oct-09
22-Oct-09
23-Oct-09
24-Oct-09
26-Oct-09
27-Oct-09
28-Oct-09
29-Oct-09
30-Oct-09
31-Oct-09
02-Nov-09
03-Nov-09
04-Nov-09
05-Nov-09
06-Nov-09
07-Nov-09
09-Nov-09
10-Nov-09
11-Nov-09
12-Nov-09
13-Nov-09
14-Nov-09
16-Nov-09
17-Nov-09
18-Nov-09
19-Nov-09
20-Nov-09
21-Nov-09
23-Nov-09
24-Nov-09
25-Nov-09
26-Nov-09
27-Nov-09
30-Nov-09
01-Dec-09
-6.366459627
-6.15942029
-6.542056075
-5.274151436
-4.474505723
-5.015673981
-5.509355509
-5.028810896
-4.960422164
-4.552673372
-4.241781548
-3.885045237
-2.941176471
-1.986044015
-1.347708895
-2.134471718
2.630106323
3.525461668
4.092920354
5.797901712
7.423822715
7.585825028
8.407079646
9.402654867
9.286898839
9.376723662
11
12.5137817
11.16557734
12.65126513
11.38613861
12.07942637
13.1038312
12.14642263
9.966777409
9.800664452
10.02754821
9.255202629
9.12568306
8.560523446
7.960741549
6.540540541
5.366631243
3.75782881
1.959773079
3.036541431
2.908163265
1.567239636
0.758725341
0.655572365
-1.151151151
-1.861832435
-2.253797158

products
02-Dec-09
03-Dec-09
04-Dec-09
05-Dec-09
07-Dec-09
08-Dec-09
09-Dec-09
10-Dec-09
11-Dec-09
12-Dec-09
14-Dec-09
15-Dec-09
16-Dec-09
17-Dec-09
18-Dec-09
19-Dec-09
21-Dec-09
22-Dec-09
23-Dec-09
24-Dec-09
26-Dec-09
28-Dec-09
29-Dec-09
30-Dec-09
31-Dec-09
01-Jan-10
02-Jan-10
04-Jan-10
05-Jan-10
06-Jan-10
07-Jan-10
08-Jan-10
09-Jan-10
11-Jan-10
12-Jan-10
13-Jan-10
14-Jan-10
15-Jan-10
16-Jan-10
18-Jan-10
19-Jan-10
20-Jan-10
21-Jan-10
22-Jan-10
23-Jan-10
25-Jan-10
27-Jan-10
28-Jan-10
29-Jan-10
30-Jan-10
01-Feb-10
02-Feb-10
03-Feb-10
Page 88
998
994
990.5
988
986
975
970.5
970.5
980
978
972
970.5
975
975
964.5
1040
1036
1022.5
1013
1024.5
1025
1022.5
997
998
963
973
972
974
968.5
967.5
967
968.5
972.5
971
967
959.5
950
950.5
935.5
936.5
929
936.5
947.5
940
948.5
944.5
932.5
925
908
908
903
911
912
02-Dec-09
03-Dec-09
04-Dec-09
05-Dec-09
07-Dec-09
08-Dec-09
09-Dec-09
10-Dec-09
11-Dec-09
12-Dec-09
14-Dec-09
15-Dec-09
16-Dec-09
17-Dec-09
18-Dec-09
19-Dec-09
21-Dec-09
22-Dec-09
23-Dec-09
24-Dec-09
26-Dec-09
28-Dec-09
29-Dec-09
30-Dec-09
31-Dec-09
01-Jan-10
02-Jan-10
04-Jan-10
05-Jan-10
06-Jan-10
07-Jan-10
08-Jan-10
09-Jan-10
11-Jan-10
12-Jan-10
13-Jan-10
14-Jan-10
15-Jan-10
16-Jan-10
18-Jan-10
19-Jan-10
20-Jan-10
21-Jan-10
22-Jan-10
23-Jan-10
25-Jan-10
27-Jan-10
28-Jan-10
29-Jan-10
30-Jan-10
01-Feb-10
02-Feb-10
03-Feb-10
-2.5390625
-1.827160494
-2.50984252
-2.994599902
-2.472799209
-1.812688822
-2.118003026
-2.804206309
-1.754385965
-2.053079619
-2.360622803
-1.96969697
-1.065449011
-1.664145234
-2.967806841
5.209914011
3.496503497
1.388200297
0.846192135
2.861445783
2.705410822
3.544303797
-0.449326011
0.050125313
-3.507014028
-2.112676056
-1.867743564
-1.417004049
-1.77484787
-0.769230769
-0.360638846
-0.206079341
-0.765306122
-0.715746421
-0.514403292
-1.133436373
-2.564102564
-2.512820513
-3.006739243
-9.951923077
-10.32818533
-8.410757946
-6.465942744
-8.247925817
-7.463414634
-7.628361858
-6.469408225
-7.314629259
-5.711318795
-6.68036999
-7.098765432
-6.468172485
-5.833763552

products
04-Feb-10
05-Feb-10
06-Feb-10
08-Feb-10
09-Feb-10
10-Feb-10
11-Feb-10
12-Feb-10
13-Feb-10
15-Feb-10
16-Feb-10
17-Feb-10
18-Feb-10
19-Feb-10
20-Feb-10
22-Feb-10
23-Feb-10
24-Feb-10
25-Feb-10
26-Feb-10
27-Feb-10
01-Mar-10
02-Mar-10
03-Mar-10
04-Mar-10
05-Mar-10
06-Mar-10
08-Mar-10
09-Mar-10
10-Mar-10
11-Mar-10
12-Mar-10
13-Mar-10
15-Mar-10
16-Mar-10
17-Mar-10
18-Mar-10
19-Mar-10
20-Mar-10
22-Mar-10
23-Mar-10
24-Mar-10
25-Mar-10
26-Mar-10
27-Mar-10
29-Mar-10
30-Mar-10
Page 89
908
894
897
895.5
896.5
901
912.5
912.5
907.5
901.5
897.5
887
868
883
876
867.5
868.5
865
863
864.5
867
867
857
860.5
864
863
867.5
866.5
871.5
880.5
882.5
877
882.5
870
872.5
874
866
887
882.5
883
892
885
879.5
881
880.5
880.5
880.5
04-Feb-10
05-Feb-10
06-Feb-10
08-Feb-10
09-Feb-10
10-Feb-10
11-Feb-10
12-Feb-10
13-Feb-10
15-Feb-10
16-Feb-10
17-Feb-10
18-Feb-10
19-Feb-10
20-Feb-10
22-Feb-10
23-Feb-10
24-Feb-10
25-Feb-10
26-Feb-10
27-Feb-10
01-Mar-10
02-Mar-10
03-Mar-10
04-Mar-10
05-Mar-10
06-Mar-10
08-Mar-10
09-Mar-10
10-Mar-10
11-Mar-10
12-Mar-10
13-Mar-10
15-Mar-10
16-Mar-10
17-Mar-10
18-Mar-10
19-Mar-10
20-Mar-10
22-Mar-10
23-Mar-10
24-Mar-10
25-Mar-10
26-Mar-10
27-Mar-10
29-Mar-10
30-Mar-10
-6.149870801
-7.549120993
-7.382550336
-7.917737789
-7.672502575
-6.825232678
-4.898384575
-3.947368421
-4.523934771
-3.634420096
-4.164442072
-4.520990312
-7.314468767
-6.807387863
-6.808510638
-8.539799684
-8.046585495
-7.238605898
-6.702702703
-4.790748899
-4.515418502
-3.986710963
-5.927552141
-5.646929825
-4.845814978
-3.467561521
-3.288740245
-3.238414294
-2.788622421
-2.275249723
-3.287671233
-3.890410959
-2.754820937
-3.494176373
-2.78551532
-1.465614431
-0.230414747
0.453001133
0.742009132
1.786743516
2.705814623
2.312138728
1.91193511
1.908617698
1.557093426
1.557093426
2.742123687

products
Chart 4.17
Rate of Change of Chana
Overbought region
Oversold region
Analysis:
The ROC of Chana has reached its historical high in the month of November. This level is
considered as overbought region. The ROC has shown its historical low in the month of May.
This level is considered as oversold region.
Interpretation:
The chart clearly shows that the Roc is moving towards the overbought region. Therefore the
investor has to be cautious to sell if it crosses the overbought region. As of now the investors
should hold the commodity.
Page 90

products
Chart 4.18
Rate of Change of Maize
Overbought region
Oversold region
Analysis:
The ROC of Maize recorded its historical high value in the month of June. This region is
considered as the overbought region. The ROC has recorded its historical low in the month of
January. This region is considered as the oversold region.
Interpretation:
The investor of Maize is better to hold because the ROC lies at the middle of overbought and
oversold regions. It is showing a movement towards the overbought region. If it moves further,
the investor can take a short position.
Page 91

products
Chart 3.3
Showing the Rate of Change of Soybean.
Overbought region
Oversold region
Analysis:
The overbought region for Soybean was recorded in the month of November and the oversold
region was recorded in the month of August.
Interpretation:
The investor who likes to buy Soybean can look for an opportunity in a short time. The ROC
lies at the middle and shows a movement towards oversold region region. As of now the investor
should hold and look for an opportunity to buy in future.
Page 92

products
Chart 4.20
Rate of Change of Turmeric
Overbought
region
Oversold
region
Analysis:
The overbought region of Turmeric was recorded in the month of November. The oversold
region was recorded in December.
Interpretation:
The investor has to hold now. The ROC lies between the overbought and oversold region. It is
falling towards the oversold region.
Page 93

products
Relative Strength Index

Table 4.9
Example showing computation of RSI by using the prices of Soybean for three months
from 1st April 2009 to 30th June 2009
Date
01-Apr-09
02-Apr-09
03-Apr-09
04-Apr-09
06-Apr-09
07-Apr-09
08-Apr-09
09-Apr-09
11-Apr-09
13-Apr-09
14-Apr-09
15-Apr-09
16-Apr-09
17-Apr-09
18-Apr-09
20-Apr-09
21-Apr-09
22-Apr-09
23-Apr-09
24-Apr-09
25-Apr-09
27-Apr-09
28-Apr-09
29-Apr-09
01-May-09
02-May-09
04-May-09
05-May-09
06-May-09
07-May-09
08-May-09
11-May-09
12-May-09
13-May-09
14-May-09
15-May-09
Page 94
Close Price
2363.5
2422.5
2443.5
2482.5
2532
2532
2541.5
2601
2637.5
2580.5
2580.5
2649.5
2625
2727.5
2747.5
2733.5
2801.5
2879
2867.5
2822.5
2753
2643
2634
2654
2654
2760.5
2840.5
2819
2798.5
2799
2754
2717.5
2743.5
2759
2724
2738
Gain
Loss
59
21
39
49.5
9.5
59.5
36.5
57
69
24.5
102.5
20
14
68
77.5
11.5
45
69.5
110
9
20
106.5
80
21.5
20.5
0.5
45
36.5
26
15.5
35
14

products
16-May-09
18-May-09
19-May-09
20-May-09
21-May-09
22-May-09
23-May-09
25-May-09
26-May-09
27-May-09
28-May-09
29-May-09
30-May-09
01-Jun-09
02-Jun-09
03-Jun-09
04-Jun-09
05-Jun-09
06-Jun-09
08-Jun-09
09-Jun-09
10-Jun-09
11-Jun-09
12-Jun-09
13-Jun-09
15-Jun-09
16-Jun-09
17-Jun-09
18-Jun-09
19-Jun-09
20-Jun-09
22-Jun-09
23-Jun-09
24-Jun-09
25-Jun-09
26-Jun-09
27-Jun-09
29-Jun-09
30-Jun-09
Page 95
2746
2695
2696.5
2697.5
2623
2629.5
2551.5
2568.5
2565.5
2659
2638.5
2615
2616.5
2615.5
2638
2628.5
2629
2639.5
2634.5
2621.5
2619.5
2619.5
2657.5
2671.5
2634
2585.5
2572
2535.5
2514.5
2511.5
2457
2422
2424
2501.5
2516.5
2529.5
2521.5
2487.5
2474.5
8
51
1.5
1
74.5
6.5
78
17
3
93.5
20.5
23.5
1.5
1
22.5
9.5
0.5
10.5
5
13
2
38
14
37.5
48.5
13.5
36.5
21
3
54.5
35
2
77.5
15
13
8
34
13
Sum
Average
1195.5
16.15541
RS
1.102351
RSI
52.43421053
1084.5
14.65541

products
Table 4.10
Relative Strength Index of Chana
Period
RSI
April 2009 - June 2009
50.40548
July 2009 September 2009
48.9245
October 2009 December 2009
57.05271
January 2010 March 2010
41.24359
Analysis:
The highest recorded RSI of Chana during one year was 57.05 during the three months
October to December 2009. The lowest recorded RSI was 41.24 during the three months January
to March 2010.
Interpretation
The RSI has not fallen below 40 and not moved more than 60 during one year. Therefore the
investor can consider 40 as buying point. The RSI for the months January to March 2010 was
41.24. The investor can consider this as buy point.
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Table 4.11
Relative Strength Index of Maize
Period
RSI
55.7692308
47.4248927
58.874878
39.9512789
Analysis:
The RSI of Maize was at a high of 58.8 during October to December 2009. It was at a low of
39.95 during January to March 2010.
Interpretation:
The RSI for the months January to March is 39.95 which is closer to 30. So the investor can
make a decision to buy Maize.
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Table 4.12
Relative Strength Index of Soybean
Period
RSI
52.28583
38.95788
60.56828
38.14677
Analysis:
The RSI has touched the level of 60 during the month of October to December. It has fallen
upto 38 during July to September.
Interpretation:
For the months January to March 2010 the was 38.14. it can be considered as signal to buy.
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Table 4.13
Relative Strength Index of Turmeric
Period
RSI
46.7654752
61.67311
50.0857633
62.5793147
Analysis:
The RSI has touched a high of 62.5 in January to March 2010. It has a low of 46.7 during the
months April to June 2009.
Interpretation:
The above analysis shows that the RSI has not moved more than 62 from past one year,
therefore the investor can consider 62.57 during the months January to March as signal to sell.
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Chart 4.21
Resistance and support level of Chana
Resistance
level
Support level
Analysis:
The Resistance level for Chana is Rs.2630 per quintal, the prices are expected to fall after this
level. The support level of Chana is Rs. 2250, the prices are expected to rise after this level.
Interpretation:
The price of Chana lies at the level of Rs.2300 and is falling towards support level. Therefore
the investors can buy Chana.
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Chart 4.22
Resistance and support level of Maize
Resistance
level
Support level
Analysis:
The resistance level for Maize was identified at Rs.1025 per quintal. The prices will not rise
after this level. The support level was at Rs. 860 per quintal. The prices will not fall after this
level.
Interpretation:
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products
The price of Maize lies at Rs.880 and showing a move towards the support level. Therefore
the investors can buy.
Chart 4.23
Resistance and support level of Soybean
Resistance level
Support level
Analysis:
The support level of Soybean was identified at Rs.2020 per quintal. The
resistance level was at Rs.2680 per quintal.
Interpretation:
The investor can buy Soybean now as the price lies around the support line.
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Chart 2.24
Resistance and support level of Turmeric
Resistance level
Support level
Analysis:
The resistance level of Turmeric was identified at the level of Rs.11800 per quintal. The
support level was identified at Rs.5100 per quintal.
Interpretation:
Based on the above analysis one can interpret that the investors can sell Turmeric because the
prices are expected to fall as the price touched the resistance line.
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Chapter V
Findings, Suggestions and Conclusion
Findings
The agriculture commodities analyzed are showing a trend to hold for some time.
Compared to equity markets the commodity markets are less volatile.
By making use of technical analysis, one can take a favorable position in the commodity
futures market, and thus benefit from price movements.
The market factor, which includes government policies, weather, production and supply of
commodities in the market etc, are the major determinants of price fluctuations in the
market.
Commodity markets are highly speculative in nature wherein there is much scope for
misleading the participants by few major players in the market.
One can reduce risk or make gains by using the strategies like hedging, speculation and
arbitrage.
The agricultural commodities are better means of investment.
Suggestions
The investors have to follow the trends shown by technical charts inorder to reduce the
risk and increase the gains.
The can construct their portfolios by adding the commodities because the commodity
markets are less volatile and they yield more returns.
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The investors must not only consider the technical tools, they also should focus on the
fundamental factors of the economy since they are major drivers of prices.
The use of hedging, speculation and arbitrage involves high risk therefore the investor
must have proper knowledge and analysis of markets.
Conclusion
To conclude, the commodity markets is a vast subject, covering a number of
participants and number of exchanges. India has 3 national level exchanges and 21
regional exchanges. The commodity market in India can be called as the emerging
markets as they are of recent origin compared to equity and debt markets. The commodity
markets form a better investment alternative to the investors and better tool to reduce the
price risk to the producers. There are a number of participants in the commodity markets
some of them are the investors, farmers, hedgers, speculators and arbitragers. Before
entering into the commodity markets one should have a complete knowledge of the
markets and their movements. There are various tools available to track the movements
of the markets like, technical analysis, fundamental analysis and statistical tools. The
participants should have a clear understanding of these tools.
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Bibliography:
Books
John C. Hull - Options, futures and other derivatives, Fifth edition
Prasanna Chandra Investment Analysis and portfolio management, Third edition
Punithavathi Pandian Security Analysis and Portfolio Management
Newspapers
Business Standard
Business Line
Websites
www.ncdex.com
www.mcxindia.com
www.nmce.com
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A study on commodity markets in India with reference to agricultural

To study the present scenario of the commodity markets.

A study on commodity markets in India with reference to agricultural

A study on commodity markets in India with reference to agricultural

Commodity derivatives market

A study on commodity markets in India with reference to agricultural

The features of a forward contract

between buyers and sellers.

A study on commodity markets in India with reference to agricultural

A study on commodity markets in India with reference to agricultural

Features of a futures contract

A study on commodity markets in India with reference to agricultural

Market to Market basis

A study on commodity markets in India with reference to agricultural

the price of wheat was Rs.1100 per quintal.

margin is assumed to be 3/4th of initial margin.

Pricing of commodity futures.

A study on commodity markets in India with reference to agricultural

Pricing futures contracts on investment commodities

Where: r is Cost of financing (Annualized)

Pricing futures contracts on consumption commodities.

Where: r is Cost of financing (Annualized)

A study on commodity markets in India with reference to agricultural

Payoff for the buyer of futures.

A study on commodity markets in India with reference to agricultural

Payoff for the seller of futures contract.

A study on commodity markets in India with reference to agricultural

A study on commodity markets in India with reference to agricultural

Introduction to hedging, arbitrage and speculation in commodity futures.

A study on commodity markets in India with reference to agricultural

Introduction to agricultural commodities.

A study on commodity markets in India with reference to agricultural

A brief introduction of the above products is given below: Chana.

A study on commodity markets in India with reference to agricultural

Market influencing factors.

A study on commodity markets in India with reference to agricultural

Factors influencing the market

A study on commodity markets in India with reference to agricultural

Market influencing factors

Technical analysis in commodity markets.

A study on commodity markets in India with reference to agricultural

A study on commodity markets in India with reference to agricultural

Simple Moving Average Analysis

A study on commodity markets in India with reference to agricultural

Relative Strength Index (RSI):

Average Gain per Day

A study on commodity markets in India with reference to agricultural

Rate of Change (ROC)

ROC = (Current price / Price n periods ago)*100

A study on commodity markets in India with reference to agricultural

Support and Resistance Level.

A study on commodity markets in India with reference to agricultural

2.2 Problem statement

A study on commodity markets in India with reference to agricultural

2.3 Review of Literature

Facts and Fantasies about Commodity Futures - Gary Gorton

A study on commodity markets in India with reference to agricultural

Behavior of Market Prices of Agricultural Commodities - S R Takle

2.4 Objectives of the study

To study the present scenario of the commodity markets.

2.5 SCOPE OF THE STUDY

A study on commodity markets in India with reference to agricultural

2.6 Research methodology