India’s rapid economic growth has witnessed lot of changes and developments in each sector of the economy. India being one of the fastest growing economies in the world has attracted investors from across the world and the investors are investing on many things in India. One of such popular and profitable investment avenue for Indian as well as foreign investors is commodities market. My dear readers today I am discussing on the Indian commodity Market and its impact on the economy as well as the benefits to the investors.
I can define commodity as “a product having commercial value that can be produced, bought, sold and consumed”. It is normally in a basic raw unprocessed state. In India, the commodity includes precious metals, ferrous and non-ferrous metals, spices, pulses, plantation crops, sugar and other soft commodities.
The commodity exchange or market is an association or a company or any other body corporate that is organizing futures trading in commodities. The new generation national level exchanges have been set up in a corporatised/demutualised environment. There are 3 nationally recognized commodity exchanges in India and about 21 regional exchanges. The national exchanges are Multi Commodities Exchange of India (MCX) in Mumbai, National Commodities and Derivatives Exchange of India and National Multi Commodities Exchange.
Commodities' trading in India is on the cusp of transformation. Organized commodities trading as a professional service-oriented set-up is a recent phenomenon in India but is growing at a tremendous pace, emerging as the largest and most exciting service sectors of this decade.
Commodity trading is nothing but trading in commodity derivatives (futures or options). In other words, if you are keen at taking a buy/sell position based on the future performance of commodities like gold, silver, agricultural commodities, metals, crude etc; then you could do so by trading in commodity derivatives. Commodity derivatives are traded at the commodity exchanges.
The commodity market in India comprises of all palpable markets that we come across in our daily lives. Such markets are social institutions that facilitate exchange of goods for money. The cost of goods is estimated in terms of domestic currency.
Trading in commodities futures is quite similar to equity futures trading. NCDEX and MCX are the two most popular national level online exchanges offering futures trading in commodities in India.
Commodity market is a promising avenue for your investments offering huge opportunities and enabling you to diversify your portfolio. With the least margin requirement being as low as Rs 10,000, it is suited for small investments also.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
Subscribe to our Youtube Channel
Hello friend! I am your personal financial advisor. By the end of this interactive session, I will help you to plan yours and your family's finances to ensure a better future.