Commodity markets Vs share markets

Type :

Indian project

Pages :

77 pages

Format :

.doc

Published date :

05/28/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
1. Commodity market
2. Objectives
Research methodology
Descriptive work of subtopic on study
1. Share market
2. Offer for sale
3. Dividends
4. Preference shares
5. Which factors affect the share price of a company?
6. Asset allocation
7. Advance-decline (A-D) line
8. American Depository Receipts (ADR) (U.S.)
9. Cumulative convertible preference shares
Libor: London Interbank offer rate
1. Margin
2. Mark to the market
3. Market capitalization
4. Market timing
5. Mid-capitalization (mid-cap) stock
Morgan Stanley capital international indexes
National Market System (NMS)
Rating agency or service
Securities and Exchange Commission (SEC)
Underlying investment
Commodity v/s stock market
Data analysis and interpretation
Conclusion
Bibliography

Abstract

Indian markets have recently thrown open a new avenue for retail investors and traders to participate in: commodity derivatives. For those who want to diversify their portfolios beyond shares, bonds and real estate, commodities are the best option. Till some months ago, this wouldn't have made sense. For retail investors could have done very little to actually invest in commodities such as gold and silver -- or oilseeds in the futures market. This was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for punting in commodities. However, with the setting up of three multi-commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stocks!

Commodities actually offer immense potential to become a separate asset class for market-savvy investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity markets may find commodities an unfathomable market. But commodities are easy to understand as far as fundamentals of demand and supply are concerned. Retail investors should understand the risks and advantages of trading in commodities futures before taking a leap. Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option.

Like any other market, the one for commodity futures plays a valuable role in information pooling and risk sharing. The market mediates between buyers and sellers of commodities, and facilitates decisions related to storage and consumption of commodities. In the process, they make the underlying market more liquid.