MCX or the Multi Commodity Exchange of India Ltd is a commodity exchange started by the Government of India in 2003. It is India’s biggest derivatives exchange, where commodities are traded in futures and options.
The stock market is a preferable choice for most investors. However, there is a completely different asset class that knowledgeable investors prefer to trade and earn hefty profits: commodity trading.
The last decade has witnessed a boom in commodity trading. The ease of this form of trading has also improved by leaps and bounds. Investors are not only viewing commodities as hedging instruments but also as a tool to assist in diversification. Let’s understand commodities, their trading, and the boons and banes.
The Indian financial market offers numerous ways, apart from equity, to invest, diversify and ensure a positively healthy portfolio. One such method is commodity trading.
In India, the Commodities Market is fairly untapped and underdeveloped. Owing to the risk involved and the cyclical nature of commodities, investors refrain from venturing into this segment.
Unlike equities, indices and currencies, the futures in commodities are physical in nature. Normally, commodity futures are used as tools of hedging underlying risk.
One of the most interesting things to understand is how commodity market works. When we talk of the working of commodity market, we must understand that there are two distinct markets viz. the spot market and the derivatives market.
