CHAPTER II
REVIEW OF LITERATURE
Amala Sara John (2020)
This paper looks into the perceptions of the derivative market among investors in
Pathanamthitta district, Kerala, and does not relate directly to the wider Indian
commodity market. It examines how investors in this region perceive derivative
instruments, highlighting both their awareness and attitudes toward derivative trading.
This study uses statistical techniques, which include percentage analysis, Weighted
Average method, and Chi-square tests in assessing local investor awareness and
perceptions of the derivatives themselves. It then traces the development of Indian capital
markets, especially post-1990s financial sector reforms and the impact that these reforms
had on such behavior among local investors towards their derivatives. By examining
investor knowledge and perceptions, the paper generates an understanding in regard to
what this particular district views about derivatives market, leading to valuable
information for improvement toward more awareness-based informed investment
decision.
Ch Hymavathi, Kalpana Koneru (2018)
The aim of the research is to determine the demographic traits of the respondents who
participated in the commodity market. According to the findings, it was established that
most respondents are males accounting for 88.1% and aged between 26-35 years which
constituted 56.2% of the respondents majority of them being professionals. Their most
avowed aim is to enhance their wealth with an additional focus of modern portfolio
Theory that relates to commodity trading. The research seeks out a variety of variables,
such as trading activities, investment objectives, literacy level, emotional tolerance
towards the risk of the investors. The sample covered 219 respondents who actively
practice one or another type of trading in the commodity market, using a structured
questionnaire that assessed their trading practices, investment objectives, literacy and
feelings in relation to risk. It seeks to provide evidence into how investors reach decisions
and draws attention to the fact that such approaches need to account for particular
objectives and risk limiting factors of the investors. The evidence indicated that the
investors are mainly controlled by the urge to create and diversify portfolios through
investment in commodities. Moreover, the research points out the lack of awareness and
involvement in the commodity market by the various societal groups including women
and transgender persons.
G.Bhoopathy, R.Sakthivel, et.al (2023)
The study focuses on four aspects when dealing with saving decisions; the risk of
emotions, trading frequency habits, investment aims, and the level of awareness for
literacy. The respondents prefer Gold, Crude Oil and Silver unlike Zince, Copper and
Lead which were the least favorite among many. It narrows down on the perspective that
investors have in the commodity market within the coimbatore district seeking the
determinant of trading in commodities and the commodities they seek to prefer. It also
studies how much investors know concerning the commodity markets and the trends in
patterns related to their awareness and decision making processes. Using simple
percentage analysis and SPSS as the appropriate statistical tool, data was collected and
analyzed with the descriptive research approach. The findings reveal that most investors
are what one considers risk averse whereby they prefer to invest in Gold, Crude oil and
Silver since they-the Gold, Crude oil and Silver are not volatile and therefore more
trustworthy. Zinc, Copper and Lead fall into the category of less appealing options
probably because of volatility risks. People investing in less volatile commodities are
more emotionally stable and don’t have a high tolerance for risk.
Hari Sudha, S. P. Dhandayuthapani (2018)
The article offers a critical appraisal of the commodity derivatives trading in India
especially centering on MCX and the trading methods adoptedThere is an analysis of the
history and the growth of the commodity derivatives market in India in relation to how
the market has evolved over time particularly its degree of efficiency in comparison with
the spot market. The research finds that the futures’ market for commodities has emerged
as more efficient than the spot market and that derivatives instruments are critical for the
efficiency of such marketsErnesto assumes that changes in the price of commodity
derivatives lead to changes in the level of volatility in the underlying market and we know
these instruments tend to amplify price variability thus increasing instability in the market
as a whole. The paper seeks to ascertain important parameters namely market prices,
volatility and time on impact considering the Indian commodity futures markets so as to
accentuate its relevance in the course of market activities. In addition, it identifies the
historical events and policy control of the Indian derivative market and in greater detail
how the changes in market regulation altered the situation.
JYOTHI SHIVAKUMAR (2023)
The research investigates the level of awareness and attitude possessed by traders towards
the agri-commodity futures market in India, which ranges from mildly optimistic to
highly positive. Although traders seem to have some knowledge of the market, there
appears to be a major lack of understanding regarding derivatives, which limits further
participation and growth of the market. Despite awareness of the market’s potential in
managing financial risks and discovering prices, traders struggle with issues such as
market volatility, regulatory challenges, and lack of education and training. The value of
these problems are best addressed using the Operations research tools of Percentage
analysis and computer software SPSS. These figures suggest that the gap in education and
lack of developed market structure are barriers to the advancement and dynamism of the
agri-commodity futures markets.
Mihir Dash (2019)
The paper describes the emerging role of the commodities market in Indian economy,
emphasizing the performance of derivatives markets that have now outdone the spot
markets in terms of trading volumes. It also explains the processes associated with price
determination in Indian Respect Permitted Commodities Market, applying GARCH
model in the empirical analysis of price movements of twelve commodities. The study
also evaluates how some macroeconomic variables such as inflation and exchange rates
impact on the prices and trading volumes of the commodities. The research also examines
the transmission mechanisms of trading volumes, inflation and other macroeconomic
variables on the Indian economy. The paper seeks to present a global overview of the
Indian commodities market as well as its participants without overtly distributing the
investors into groups or defining their characteristics. But it does provide clues on the
processes of price formation, the functions of derivative instruments, and the impact of
macroeconomic factors on the commodity markets, thereby giving a basis for analyzing
the behavior of the market and its participants in regard to particular market trends.
P. Periasamy (2018)
The paper is concerned with the understanding of investors in the Commodity Derivatives
Market based in Chennai with special focus on their expectations and their awareness,
patterns of investment and preferences. However, it does not explicitly identify the
classifications of the different classes of investors in the Indian commodity market. The
research is based on both primary and secondary source of data, statistical methods in a
broader sense are used to draw inferences regarding different aspects of investor
behaviour in the commodity derivatives market. It aims at investigating the possibilities
of investor expectations and the awareness on the functioning of the commodity
derivatives market in the sense of how much the investors based in Chennai know of the
trends that are in the market and the risks that are associated with the trade. The paper in
addition seeks to ascertain which of the investment options and preferences are available
among these investors which determines how they invest on the commodities in the
market in relation to the type of commodities that are likely to be invested. Finally, the
paper presents a number of constructive recommendations that would improve the
investment climate in the Indian Commodity Derivatives Market by addressing the need
for enhancing the level of investors trust and participation.
Priti Dubey, Rishika Shankar (2020)
It elaborates on interlinkages between equity and commodity markets, in particular how
each of these markets affects the other. It instead puts more importance on the investment
outlook in the equity market and not directly examining the awareness about the Indian
commodity market. This study discusses the effects of variations in one market, like that
of the equity market, as a ripple effect on the commodity market and vice versa. It also
explores the perception of investors toward the interlinkages of these markets and how
their views might influence investment decisions. Highlighting the linkages, the paper
offers an important insight into how investor sentiment in the equity market might impact
commodity investment decisions. Though it does not measure directly the levels of
awareness regarding the Indian commodity market, it offers a fine analysis of factors
influencing investor behavior across both markets.
Priya Priya, Nishi Malhotra (2017)
The paper emphasizes the importance of financial literacy and awareness among investors
in wealth management, hence underlining the need for better financial education on better
understanding financial markets, such as commodities. The increase in financial literacy
is argued to have a direct effect on higher economic growth, where better financial
literacy equates to better decision-making for investors. It explores secondary data that
help identify major variables influencing financial literacy and studies the relationship of
financial literacy with financial reforms implemented in India. This study reveals that
higher financial literacy can support growth through enhanced investment practices. It
also emphasizes that investor education is crucial in order to effectively tap the
demographic dividend: educating a more financially literate populace that could actively
participate in and contribute to the economy, thus increasing their long-term stability and
prosperity.
R.Kanthiah, A. Prasath Kumar. (2018)
This paper does not set out to classify types of individual investors in the Indian
commodity market, but rather it looks the investors’ behavior in commodity trading in
Coimbatore and explores the extent to which a combination of attitude and perception
impacts investors’ choice of investment and their level of awareness. The research takes
the data from a sample of 200 investors and the data are analyzed using path analysis. It
shows that Attitude and perception are prominent determinants of investment preferences,
but perception and awareness are poor correlates among investor. This implies that more
active communication and information flow are required so that better investor decisions
could be made. The paper argues that investors ought to seek interaction with brokers so
as to place their investments more prudently and strategically. The paper suggests further
that awareness seminars should be organized with the aim of creating awareness and
information for the investors in making good investment decisions in commodity trading.
This study adopts a convenience sampling method, and the results indicate that although
the investor perception affects the decision making, there is a considerable gap in the
level of awareness that can be filled through education and guidance. It is evident that
when investor perception of what to invest in has some degree of certainty such as that
derived from interaction with brokers and participation in educational seminars, their
decision making process will improve.
Ramanatha A, Ramya M, et.al (2024)
The achievement of this article is the analysis of the features of the activity of traders,
fundamental institutions or regulators of the financial markets as well as the markets of
the commodity types with the instruments such as swaps, options, and futures. The article
emphasizes the significance of risk management in activities of commodity traders such
as risk arising from pricing, business operation and risk arising from international politics.
This research explains how through diversification of portfolios, risks are reduced while
for investors, the expected returns increase outlining the inherent structure of commodity
markets. This paper also discusses the growing importance of educational trends in other
spheres of activity, in particular, the development of commodity trading, that are
paramount for better decision making in the marketplace. Of particular concern is
awareness enhancing which is considered paramount in order to prepare participants to
the market in commodity trading. A broader discussion may be on the direction of the
evolution of the trading practices including the effects of sustainability considerations on
the markets. For the markets functioning, the paper does not specifically outline in detail
types of investors that are in the Indian commodity market but gives a far reaching
outlook.
Shashi Gupta, Himanshu Choudhary, et.al (2016)
The niche market of Indian commodity derivatives trading contains high net worth
individuals (HNWI) and retail investors as its primary players. Retail investment in
commodities seems overwhelmingly high with a variety of investors even though it is
laden with intricacies and requires heavy initial input. A survey conducted amongst
brokers gives an understanding of their perceptions regarding the Indian market of
commodity derivatives, their trading volume, their advantages and any dissatisfaction
towards it. The brokers evaluations focus on the effectiveness of commodities allowing
them to hedge the derivatives market, to manage risk and to discover the prices. The
survey also measures the importance of different reasons for using commodity derivatives
and risk management is one of the most important. Besides, the majority of the HNWI
investors trading in commodity derivatives are more active in derivatives trading of non
energy commodities due to their low cost and high liquidity. This area of the study adds to
the understanding of how brokers view efficiency in the market and the value of the
commodities in derivatives as well as their perspective in managing risk and creating the
price.
Shefali Dani, Riddhi Ambavale (2015)
The main focus of the paper involves dealing with the risk and return of investing in gold
and silver without targeting particular groups of investors in the Indian commodity
market. The most remarkable feature of this growth has been the evolution of
commodities trading as an alternative investment, with special regard to gold and silver
investment analysis. Evaluating investor choices for these same metals, the study analyses
the risks and returns associated with them. In order to assess these aspects, purpose of
emphasis comes on perceived risk and return among other factors. Thus, the paper offers
a view of the way investments in gold and silver are expected to pay off in terms of risk
and return, and highlights the behavior of the dynamics of precious metal investments in
this context. The study also examines the use of various hedging techniques especially
derivatives and their effect on the returns on equity of the firm. Owing to these reasons,
the study emphasizes the need to consider risk management tools in gold and silver
investments as well as the expected returns. The research concludes by discussing the
implications for several corporations with regard to the use of derivatives for risk
management and enhancement of the return rate of investment along with comprehensive
assessment of risk and return associated with these commodities.
Shital Jhunjhunwala, Sandra Suresh (2020)
The paper looks at the volatility links between the Indian stock and commodity markets,
emphasizing how volatility spillover occurs between these two areas. It utilizes data from
2006–2018 in a bid to explain how high lows of one market affect the other over the
course of time. Employing DCC-GARCH, the study examines the dynamic conditional
correlations and time lags between stock returns and commodity market returns and
aggressors of volatility spillover. Although the paper does not pinpoint the type of the
investors that operate in the Indian commodity market, Indian market investors get insight
as to how one markets volatility affects another for investment purposes. They are of the
opinion that once these volatility linkages are understood, it would be easier for the
investors to determine risks and returns in both markets. The paper makes claims that by
assessing empirical data over a relatively long period of time, there is better
comprehension of the stock and commodity market relations in Indian environment and
thus provides strategies of going through the challenges of the two.
T.G.SHEJO -,Ms.A.R.PRIYANKA RANI (2024)
Original investment types as such are not discussed in this paper from the perspective of
Indian investors rather, it discusses the area of commodity market and the trends of gold
prices. It covers the transactions of various commodities in the marketplace but with focus on
gold which is very essential in the socio-economic sphere of India. It studies the changes in
the price of gold and tries to establish the reasons behind the movements. Primary data
collection techniques are omitted in this study, while price trend analysis and estimation are
done with the help of secondary data sources. Importance of gold in the context of Indian
culture and economy is elaborated, explaining the fact that gold price can be essentially
molded by certain core parameters, such as: consumption, political strife, and economic
timing. The paper addresses the aggregate aspects of the Indian commodity market, including
how various forces, domestic and global, determine prices of gold and commodities in
general. However, despite this, it does not classify the investors into broad categories, but
describes the gold commodity market in detail, discussing its features in the economy and
culture of India.
