This document summarizes a study on investors' preferences in the Indian commodities market. The study examined factors that influence investors' decisions to invest in commodity markets. It surveyed 60 investors in and around Trichy district, Tamil Nadu who had invested in commodities. The study found significant associations between investors' age/profession and factors like terms/conditions, awareness, and tax exemptions. It also found significance among areas of investment and tax exemptions, and a high significance between how investment decisions are made and awareness/knowledge factors.
This document summarizes a study on investors' preferences in the Indian commodities market. The study examined factors that influence investors' decisions to invest in commodity markets. It surveyed 60 investors in and around Trichy district, Tamil Nadu who had invested in commodities. The study found significant associations between investors' age/profession and factors like terms/conditions, awareness, and tax exemptions. It also found significance among areas of investment and tax exemptions, and a high significance between how investment decisions are made and awareness/knowledge factors.
This document summarizes a study on investors' preferences in the Indian commodities market. The study examined factors that influence investors' decisions to invest in commodity markets. It surveyed 60 investors in and around Trichy district, Tamil Nadu who had invested in commodities. The study found significant associations between investors' age/profession and factors like terms/conditions, awareness, and tax exemptions. It also found significance among areas of investment and tax exemptions, and a high significance between how investment decisions are made and awareness/knowledge factors.
This document summarizes a study on investors' preferences in the Indian commodities market. The study examined factors that influence investors' decisions to invest in commodity markets. It surveyed 60 investors in and around Trichy district, Tamil Nadu who had invested in commodities. The study found significant associations between investors' age/profession and factors like terms/conditions, awareness, and tax exemptions. It also found significance among areas of investment and tax exemptions, and a high significance between how investment decisions are made and awareness/knowledge factors.
European Journal of Commerce and Management Research (EJCMR) Vol-2, Issue 1
www.ejcmr.org January 2013
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A Study on Investors Preference in Indian Commodities Market
Sivarethinamohan Dean-Faculty of Management Disha Technical Campus Raipur. India [email protected] P. Aranganathan Associate Professor & Head MIET Engineering College Trichy, India
Abstract Every financial scheme and plan is having its own pros and cons and the investors have their own preferences for different schemes and plans. The major areas of investments available for Indian Investors include Equity Market, Derivatives, Bonds, Debentures, Commodity market etc. Indian investors choose different areas according to their perception and attitudes. Some of them are successful with their investments and some cannot enjoy the fruit in time due to several reasons of their investment products. Today commodity market proves to be a very major avenue of investment. Hence the authors decided to conduct a research on the customer preference of commodity market with respect to various investment avenues in around Trichy district, Tamilnadu. It was observed from the statistical analysis that there was a significant association between the respondents age and the various factors such as Terms, conditions& Benefits, Easy transactions. Also there was a significant association between the respondents Profession and factors such as Awareness & knowledge, tax exemptions, Affordable brokerages. As a result of Anova test there was significance among Areas of Investment and tax exemption. Also there was a high significance between way of investment decision reached and factors such as Awareness & knowledge, Terms, conditions& Benefits, Tax exemption
I ndex Terms arbitrageurs, speculators, Brokerages, Commodity, etc I. INTRODUCTION In this growing mixed economic system in developing countries like ours, production and operation gets increased every year due to liberalization, privatization and globalization concepts. Globalization provides big platform, more opportunities to extend the domestic business throughout the world and this create plenty of job opportunities in India both in manufacturing and service sector. Hence Indian individual income is getting increased and they search best investment avenues to invest their surplus money for their future needs. Indian financial system contains various financial institutions to accept the public savings under various financial schemes and plans. Every financial scheme and plan is having its own pros and cons and the investors have their own preferences for different schemes and plans. The major areas of investments available for Indian Investors include Equity Market, Derivatives, Bonds, Debentures, Commodity market etc. Indian investors choose different areas according to their perception and attitudes. Some of them are successful with their investments and some cannot enjoy the fruit in time due to several reasons of their investment products. Today commodity market proves to be a very major avenue of investment. Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. Commodity market is a place where trading in commodities takes place. It is similar to an equity market, but instead of buying or selling shares one buys or sells commodities. The researcher likes to study about the investors preference in various Investment Avenues of commodity market products and also to identify the relationship between the various factors influencing the investors decisions on commodity market.
II. REVIEW OF LITERATURE
According to N.R. Institute of management Ahmadabad, Investors consider factor like global economy, availability of commodity and others things during investing in commodity and earn money by doing technical and fundamental analysis from their brokers.
Media and friends are powerful communicating networks for expansion. It has been that, respondents are investing their income in diversified portfolio and less risky assets. There has been seen that coffee, wheat and cotton are more dealing commodity and investor believe that commodity market have good opportunist market in future and most of investor invest when there is favorable price in market. The commodity futures markets are experiencing a good growth in the recent past. European Journal of Commerce and Management Research (EJCMR) Vol-2, Issue 1 www.ejcmr.org January 2013
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A. Sathish Kumar (2003) after almost two years that commodity trading is finding favor with Indian investors and is been seen as a separate asset class with good growth opportunities. For diversification of portfolio beyond shares, fixed deposits and mutual funds, commodity trading offers a good option for long-term investors and arbitrageurs and speculators. And, now, with daily global volumes in commodity trading touching three times that of equities, trading in commodities cannot be ignored by Indian investors.
Online commodity exchanges need to revamp certain laws governing futures in commodities to make the markets more attractive. The national multi-commodity exchanges have united proposed to the government that in view of the growth of the commodities market, foreign institutional investors, too, should be given the go-ahead to invest in commodity futures in India.
Commodity trading in India is poised for a big take-off in India on the back of factors like global economic recovery and increasing demand from China for commodities.
R. T. Nirmal Kumar (2006) in his study identified that a perception lies with majority of investors that future trading will lead to profits and it is not used for other purpose like hedging. The nature of the derivatives instruments are to reduce the risk involved in trading but in real time investors are not taking derivatives trading for reducing their risk involved in trading and profit making is considered to be an important factor for the them.
On the other side a number of reforms and initiatives are still needed in promoting India as a major futures trading hub in tune to the status of being amongst the top five producers of most of the commodities.
III. RESEARCH METHODOLOGY A. Statement of the problem:
In this competitive business world, retaining the customers and motivating them towards the business is very difficult task handling by various industries. In this commodity market provides various investment products to the investors to invest their surplus money, but studying the investors perception, expectation, and satisfaction level on their investment avenue is very difficult, this problem is also handling by VISI Financial Investment Services to safeguard their interest of investors and to retain their participation in trading for long time. Lot of threats, problems will be faced by following ways: It becomes difficult to approach customers and interact with them Its difficult to speak with customers longtime Company cannot assess level of all kind of risks Its difficult to further increase the investment from existed customers Its difficult to make understand the investors about nature of business particularly to the rural background people.
B. Objectives of study:
To study the Investors preference in commodity market at VISI Financial Investment To understand the relationship between the demographic factors and the various factors influencing the investors decision regarding the commodity market C. Research Design
In the present study, researcher has adopted descriptive cum diagnostic design. 1) Population The population size is 200, who had invested in various financial products in different investment margin from different places in and around Trichy district, Tamilnadu. 2) Sample size Among those investors 60 investors who had invested in commodities market, had been chosen for the study 3) Sampling method The sampling method adopted for this study is Non- Probability Convenient Sampling.
D. Tools of Data Collection
Data requiring for the study is obtained from two sources namely (i) primary data source and (ii) secondary data source:
a. Primary Data: this type of data is collected directly from the respondents by the researcher using the questionnaire as an instrument and personal interview as the communication medium for collecting it.
The primary data was collected using self prepared questionnaire consisting of 6 socio-demographic and 29 closed ended questions. Owing to the intrusive nature of the questions, the researcher was hesitant about the validity of the response.
Pre testing
The questionnaire was pre tested on 10 investors. However, the respondents answered the questions without any trouble; minor changes were made in the questionnaire such as reducing the number of questions. The questionnaire was then subjected to approval from academic experts and then necessary changes were made to convert into a standardized European Journal of Commerce and Management Research (EJCMR) Vol-2, Issue 1 www.ejcmr.org January 2013
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one. Printed questionnaire was given to about 60 investors; among which 60 completed questionnaires were received and used for data analysis.
b. secondary data: Secondary data for study have been extracted from Reference books, Web pages, company booklets, etc
E. Statistical Tools used
The end result of data collection in the accumulation of raw data in a quantitative form, such data are then summarized and subjected to statistical analysis. Data was analyzed statistically using SPSS (Statistical Package for Social Science) 16 version. The following statistical tools are used for the study: 1. Percentage Analysis 2. Chi Square Test 3. Anova 4. Correlation Analysis IV. ANALYSIS AND INTREPRETATION
Table 4.1: Socio Demographic Variables 1 Gender Male 64.4% Female 35.6% 2 Profession Government 3.3% Private 63.3% Business 33.4% 3 Age Group Below 25 yrs 44.4% 25-30 yrs 40% 31-40 yrs 20% Above 40 yrs 6.6% 4 Marital Status Married 42% Unmarried 58% 5 Annual Income(Rs) Below Rs 2, 00,000 30%
Rs. 2,00,001 to 4,00,000 50% Above Rs. 4,00,000 20% SOURCE: Primary Data
From the table 4.1 it is inferred that 44.4% of respondents are in below 25yrs old, 40% of respondents are in between 26 to 40yrs old, 20% of respondents are in between 41 to 45yrs old, 6.7% of respondents are in between 46 to 50yrs old. is inferred that 64.4% of respondents are male, remaining 46.7% of respondents are Female.it is inferred that 4.4% of respondents are working in Government, 48% of respondents are working in a private, and 20% of respondents are doing a business. it is inferred that 30% of respondents earn Below Rs. 1,00,000, 50% of respondents earn between Rs 1, 00,001 to 2,00,000, 20% of respondents earn between Rs. 2, 00,001 to 4, 00,000
Classification of Investment Products
56.7% of respondents have preferred Metals 56.7% of respondents have preferred Metals, 24.4% of respondents have preferred Agro products, 4.4% of respondents have preferred Energy, 16.7% of respondents have preferred Bullions.
Classification of Ways of Investment Decision
44.4% respondents reached their investment decision through self analysis, 20 % of respondents through Relative/friends, 26.7% of respondents through Tips from experts, 4.4% of respondents through Newspapers, 16.7% of respondents through commercial channels.
Table 4.2: Percentage of Investment
Percentage Frequency Percent Cumulative Percent 25% 48 80.0 80.0 50% 10 16.7 96.7 75% 2 4.4 100.0 Total 60 100.0 SOURCE: Primary Data INFERENCE: From the table 4.2 it is inferred that 80% of respondents allot 25% of their income for investments 16% of respondents allot 50% of their income for investments, 4.4% of respondents allot 75% of their income for investments.
Mean, Standard Deviation and RankoOf Variables
Table 4.3: Mean, Standard Deviation and Rank of Variables S.No Variables Mean Std. Deviation Rank 1 Knowledge about commodity 3.7000 1.16880 15 2 Market study is important 4.2500 1.01889 2 3 Government trends make changes 3.9500 1.15605 7 4 Un certainty 3.3167 .89237 18.5 5 Reasonable risk 3.7667 1.29362 12.5 6 Risk is disclosed 3.6500 .87962 17 European Journal of Commerce and Management Research (EJCMR) Vol-2, Issue 1 www.ejcmr.org January 2013
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7 High risk in un organized trading centers 3.8667 .92913 9 8 reasonable returns 4.0167 1.09686 6 9 difference in returns 3.7667 1.19840 12.5 10 Tax exemption 3.2333 1.11030 20 11 Long term benefits 3.9333 1.20545 8 12 Safety of margin 3.6667 1.27115 16 13 Acceptable terms and conditions 4.0333 1.02456 4.5 14 less security evidence 3.3167 1.04948 18.5 15 Efficient clearing houses 3.0333 1.05713 22 16 contracts decided independently 3.7667 1.19840 12.5 17 Flexible maturity period 4.0333 .86292 4.5 18 Timely benefits 4.1667 1.23737 3 19 Affordable brokering charges 3.1000 1.03662 21 20 Easy mode of payment 3.8500 .87962 10 21 On time sale of contracts 4.4333 .87074 1 22 Easy available loans for investment 3.7667 1.36998 12.5
Table 4.3 summarizes the mean score value, standard deviation and relative rank of all the 22 variables used for the study. The variable On time sale of contracts received the highest mean score among the other variables and hence it is ranked first among the other variables. The variables Efficient clearing houses and Affordable brokering charges received the lowest mean score among other variables and hence it is ranked last. The variable Reasonable risk has got the largest standard deviation among all the other variables.
Table 4.4: Association between the age of the respondents and various dimensions of influencing factors
Sl.No: Variable Degree of freedom Pearson chi square significance value() 1 Awareness &knowledge 9 =10.855 P=0.286 P>0.05 Not Significant 2 Terms, conditions& Benefits 9 =28.241 P=0.001 P<0.05 Significant* 3 Tax exemption 9 =9.136 P=0.425 P>0.05 Not Significant 4 Easy transactions 9 =40.152 P=0.000 P<0.05 Significant* 5 Affordable Brokerages 9 =15.86 P=0.198 P>0.05 Not Significant Significance at 0.05* Levels From the table-4.4 it is observed that there is a significant association between the respondents age and the various dimensions of influencing factors such as Terms, conditions& Benefits, Easy transactions. However there is no significant relationship between the age and other dimensions of influencing factors.
Table 4.5: Association between the Profession of the respondents and various dimensions of influencing factors
Sl.No: Variable Degree of freedom Pearson chi square value() Significance
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From the table-4.5 it is observed that there is a significant association between the respondents Profession and the various dimensions of influencing factors such as Awareness & knowledge, tax exemptions, Affordable brokerages, However there is no significant relationship between the Profession and other dimensions of influencing factors.
ANOVA Test Anova was conducted to find out the significance between the Areas of invest with regard to the various dimensions of influencing factors. The results are summarized in the tables.
Table 4.6: One way Analysis of Variance between area of invest with regard to various dimension of Investment Decision Sources D f Me an Sq uar e Standard Deviation Mea n FR atio Significa nce Awarenes s &knowle dge Between Groups Within Groups
3 5 6
0.5 95 .78 5
C1=0.891 63 C2=1.027 11 C3=0.000 0 C4=0.210 82
3.58 83 3.85 71 4.00 00 3.73 33
0.75 8
0.523 P>0.05 Not significa nt Terms, condition s& Benefits Between Groups Within Groups
3 5 6
1.3 24 0.8 25
C1=1.042 76 C2=0.755 93 C3=0.000 0 C4=0.567 65
3.94 12 4.42 86 5.00 00 4.10 000
1.60 5
0.199 P>0.05 Not significa nt Tax exemptio n Between Groups Within Groups
3 5 6
3.0 82 0.8 66
C1=1.008 43 C2=0.916 87 C3=0.000 0 C4=0.666 67
3.79 41 3.92 86 5.00 00 3.00 00
3.55 9
0.020 P<0.05 significa nt* Easy transactio ns Between Groups Within Groups
3 5 6
1.0 58 0.6 87
C1=0.854 89 C2=0.892 58 C3=0.000 0 C4=0.666 7
3.76 47 3.78 57 5.00 00 4.00 00
1.54 1
0.214 P>0.05 Not significa nt Affordabl e Brokerag es Between Groups Within Groups
3 5 6
1.2 78 0.7 66
C1=0.869 88 C2=0.937 61 C3=0.000 0 C4=0.849 84
3.02 94 3.42 84 4.00 00 3.50 00
1.66 8
0.184 P>0.05 Not significa nt Significance at 0.05* Levels
It is inferred the table-4.6 that there is significance among Area of Investment and the dimension of influential factors such as tax exemption. However there is no significance among the Area of Invest and the other dimensions of influential factors.
Table 4.7: One way Analysis of Variance between ways of Invest decision reached with regard to various dimension of Investment Decision
Sources D f Me an Sq uar e Standard Deviation Mea n FR atio Significa nce Awarenes s &knowle dge Between Groups Within Groups
0.184 P>0.05 Not significa nt Significance at 0.05* Levels Significance at 0.01** Levels
From the table 4.7 it is inferred that there is a high significance between way of investment decision reached and the dimension of Awareness &knowledge, Terms, conditions& Benefits, Tax exemption. However there is no significance among way of investment decision reached with other dimensions
Table 4.8: Inter Correlation Matrix Inter correlation Matrix among Various Dimensions of influencing Factors
Subject Dimens ions Marke t knowle dge Risk s Retu rn Secu rity Matu rity Liqui dity Market knowle dge 1 Risks 0.000* * 1 Return 0.000* * 0.00 0** 1 Security 0.000* * 0.00 1** 0.00 0** 1 Maturit y 0.000* * 0.00 0** 0.00 0** 0.000 ** 1 Liquidit y 0.000* * 0.00 0** 0.00 0** 0.000 ** 0.000 ** 1 **Significance at 0.01 Levels From the table 4.8, it is inferred that, all the P value are less than 0.01(P<0.01), hence it conforms high significance between these 6 variables. all this 6 components such Market knowledge, Risks, Return, Security, Maturity, Liquidity factors having inter correlation which influence the investors to invest on commodities market investments collectively.
V. CONCLUSION Finally the research conclude with investment behavior of investors and their attitude towards commodities market investments, that is the different respondents consider the different factors to take their investment decisions particularly in commodities market investments, because it is having more both risk and return factors, if the company advice the make the respondents to know the long benefits, they will also turn their eyes on commodities market. Particularly the Bullions have more value and being traded in huge volume per day. If the respondents invest in these products, they can gain more profit, but the company has to trade and give service effectively to satisfy the investors investment needs. Long term investments are highly suggestible than short term investment, because long term investments give a stable return for long time also it will make the investors to increase their knowledge in commodities market products and its trend and directions.
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