Way2Wealth Commodities Pvt. Ltd. making investing simpler, more understandable and profitable Commodity Markets July 2010

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Commodity - Definition A commodity is any good or service produced by human labour and offered as a product for general sale on the market - Karl Max Characteristics Commodity is anything movable (a good) that has following characteristics Fungible, i.e. the same no matter who produces it Derivatives, i.e. involves further processing into number of products Economic cost, i.e. production of it involves some cost

Wheat in your bread Petrol in your vehicle Coffee on your table Sugar in your sweets Chana in your chhole Gold in your necklace ……… and so on ……. Commodities are everywhere Commodities – in Real Life

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Commodity – As Asset Class In financial parlance, assets are economic resources that is capable of being owned or controlled to produce value Commodity too has gained importance currently as independent asset class Commodity, being the natural goods are independent of other asset classes Assets Classes Equities:Performer during economic expansion & an out performer over very long term… Fixed Income:Performs at the later stage of recession… Real Estate: Performs during early expansion… Commodities:Performance spread evenly over the economic cycle…

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Commodity – Unique points of diversification 1. SeasonalityA major force in the commodities markets 2.CorrelationUnlike other asset class, commodities are positively and negatively correlated within & outside the group which is unique to commodities only 3.WeatherNo other asset class are so much influenced by weather patterns 4.HedgeProvides natural hedge against war, inflation, other asset portfolios, recessions etc. example -GOLD

Commodity – Performance

Contribution in global landscape Global Vs. India Global commodity has relatively long history Size is 9 times larger than India India Commodity futures, though active since 19 th century was banned later in 1970’s Commodity volumes shoots up significantly after re-launch in 2003 MCX emerged as world’s Sixth largest exchange Volumes on Indian exchanges are increasing at CAGR of 73.7 percent Global India Source:FMC,Way2Wealth Research Commodity Trading ( Value in Million USD)

Global growth in Commodities Share of Asia has jumped more than 5 times

Global growth in Commodities Chinese exchanges has seen two fold increase in volume

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Classification of Commodities Commodities Bullion Gold Silver Palladium etc Energy Crude oil Heating oil Natural gas Furnace oil Etc. Base Metals Copper Zinc Aluminum Nickel Tin Agriculture Grains Pulses Edible oils/seeds Spices etc

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Commodity – Indian Structure 20 Other Regional Exchanges NMCE Commodity Exchanges MCX National Exchanges Regional Exchanges FMC – The Regulator NBOT NCDEX Leadership position with >90% share

Indian Growth so far MCXNCDEXTOTAL Source:FMC,Way2Wealth Research Bullion and other metals Other than bullion metals Agriculture Energy Others Source:FMC,Way2Wealth Research Segment wise % Share of Commodities * other segment includes energy& other metals Significant rise in volume since launch of exchanges in 2003 MCX Leader in Metals & Energy NCDEX Leader in Agri > 65% CAGR Growth Volume Growth in Indian Exchanges

Indian Growth during

Returns in Indian commodities Almost 45 commodities are available for trading in both NCDEX & MCX Though few have been de-listed during high inflation times, re-listing also has happened Bullion, Base metals, energy & Agri are the major contributors in terms of volumes

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Commodity provides true diversification in financial portfolio Commodity act as hedge against risks involved in business Rising income will ensure Inflation which in turn will ensure bull market in commodites Explosion of population and shriking agricultural land would leave commodity scarce Returns chasing funds & investors (traders, investor &HNI) will make it vibrant Consumption / Spending in infrastructure / GDP growth will lead to depletion of metals Secular bull market in commodities is likely to continue Why Invest in Commodities

Hedgers : Risk Management oConsumers – Refineries, food processing companies oTraders, exporters, importers oProducers – farmers, Integrated producers Speculators: High Volatility Higher Leverage oRetail investors, Commodity spot trader oInstitutional, Corporate & proprietary traders Arbitrageurs : Safe Opportunist oSpot future arbitrage oSpread Strategies oIntra and inter market arbitrage Investors: Portfolio diversifier oIndividuals, Pension & Mutual Funds oCorporate bodies Who Can Invest

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

How to Invest Procedure for Trading in Commodities Open Demat & Trading A/C (Way2Wealth) Filling KYC (Know Your Customer) Documents required : Pan Card, Address Proof, Networth, Cancelled cheque (MICR), Photo etc To get familiar with this asset class, start reading research reports and monitor advisory and execution Acquire full knowledge of risk involved in futures Mark to Market Daily Pay-in & pay-out Margin requirements Contract expiry & rollover Leverage, profit & loss etc

Index Definition Commodity – As Asset Class Commodity – Uniqueness Classification of Commodities Indian Commodity Market Size Commodities Offered for Trading Why Commodities How to Invest Way2Wealth

Methodology - Analysis Fundamental Supply-n-demand, crop survey, climatic changes, policies, logistics, specifications, delivery stocks, physical market linkages, Cartel move, etc Technical Chart patterns, indicators etc Derivative Volume and Open Interest Change, Contract duration, rollover, Relative analysis with other markets etc Statistical Arima modelling, Correlation & regression study, Deviation, Time series, Seasonality, Ratio study etc. Way2Wealth

Products Strategies Arbitrage / Spreads Hedging – All commodities Trading / Investment advisory Reports Daily Weekly Special Events Commodity Profiles Special Support Need based special coverage of non futures commodities like Coal, Chemicals, Naptha, Freight, Carbon credits etc. (on cost basis) Research Way2Wealth

Trading Products Based on Fundamental / Technical / Derivatives & Algorithm Plain vanilla Trading Customised Trading Investing Products Algorithm or statistical based Trend chasing, Money management principle, premium brokerage Strong execution skills Way2Wealth

The Way2Wealth Sunil Ramrakhiani - COO More than 15 years in industry. Founder member – NCDEX, Member of product committee, Regular speaker in various forum Vinay Tiwary - Sales Head More than 8 years in industry. Have worked with prominent exchange as product head for bullions. Shantanu Bhardwaj- Head Business Analytics & Product Development More than 8 years in industry. Conceptualise & Launched pulses & Guarseed contracts in NCDEX. Have worked as Regional Manager –west in IL&FS Investsmart. Brajendra Talesara- Head Dealing & Arbitrage desk More than 12 years experience in industry. Strong execution skills. Have worked in Anand Rathi, Investsmart etc.

The Way2Wealth K N Rahaman - Research Head More than 10 years in Industry. Former Research Head in Agriwatch & Investsmart. Consultancy Projects done for ADB, JBIC, ICICI, OXFAM, DUPONT etc. Member of All India crop forecasting committee (industry) for pulses & oilseeds. Prasad MSR - Research Analyst More than 6 years in industry as Research analyst for various commodities. Have worked with IL&FS Investsmart, Transgraph etc Krishna Reddy - Research Analyst More than 6 years in industry as Research Analyst for various commodities. Have worked in IL&FS investsmart

Thank you Team Commodities