Commodities may be classified into agri-commodities such as spices, soyabean, corn, cocoa and so on. Bullion and other metals may also be traded. Crude oil, natural gas, furnace oil as well as vegetable oils are also traded on commodity exchanges.
Commodity exchanges in India, are basically electronic trading and settlement systems, with a nationwide presence. A number of brokers are associated with these commodity exchanges who offer online trading in commodities. Electronic trading enables even retail investors to participate in the markets by purchasing small quantities of precious metals and other commodities and holding them in electronic form.
You can buy and sell commodities very fast. All transactions are electronic. There is no need of physical buying and selling of commodities.
Traditionally the prices of commodities move in a direction opposite to equity. Commodities are a good alternate investment.
You can easily buy and sell commodities unlike real estate. There is always a buyer and a seller for the commodity.
Invest only a fraction of the cost of the commodity and take home huge profits, through margin financing.
The forward market commission (FMC) functions as a regulatory authority in the commodity market. The National Commodity and Derivative Exchange (NCDEX), Multi-Commodity Exchange (MCX) and National Multi Commodity Exchange (NMCE) are the commodity exchanges present in India.
In order to open a commodity account you need to submit an address and an identification proof, such as a copy of the voter's card or the passport, a bank account statement, copy of the PAN card which form a part of the know your customer (KYC) norms. This is similar to the opening of a demat account in the equity market.
A trading account will have to be opened with National Spot Exchange Limited (NSEL) and a demat account with a depository such as National securities depository limited.
A minimum amount of INR 5000 is sufficient to trade in most commodities. The brokerage charges are in the range of 0.1-0.3% of the contract value. Transaction charges are in the range of INR 5-10 per Lakh per contract. The brokerage varies based on the type of commodity.
12 January 2013, Thursday
Since ancient times trading in commodities has been part and parcel of global history. One has heard of the barter system where goods and commodities were traded in exchange for other commodities based on necessity. If one commodity was in plenty in a particular area it was traded for another comm...
18 January 2012, Thursday
You must have heard or have seen advertisements about traders making millions of dollars through Forex trading. It is time we should know some basic about it. Indianmoney.com proudly presents this article covering all the aspect of Forex Trading. Points to be covered : What is Forex Trading ...
17 January 2009, Thursday
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 since1952 and until 2002 commodity derivatives market was virtually non-existent, except some negligible activation an...
20 January 2008, Thursday
The BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks with the base value of 100 started on April 1979. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies ...
07 January 2014, Thursday
There is a famous saying “Better be safe than sorry”. One cannot make too many mistakes and live to tell the tale when he is investing in the stock market. Building a safety net under one’s portfolio is very essential and its true value is realized only in a recession. Fortunately...
18 January 2012, Thursday
Formalities for a health insurance claim You can make a claim under a Health insurance policy in two ways : On a Cashless basis and A Reimbursement Claim On a Cashless basis : For a claim on cashless basis, your treatment must be only at a network hospital of the Third Party Admini...