List of Commodities Articles

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.

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.

The investment market in India is an exciting one for an investor looking to make profits. One can invest in multiple financial products such as equities, FDs, Mutual funds etc.

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.

One of the things to understand about commodity trading is that the commodity market hours are much longer.

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.

The commodities market is a preferred platform for trade for some investors. However, before delving into the trading instruments available in a commodity market, it’s important to understand the definition of a “commodity” in this form of trading.

A bullion market is a market where traders trade in precious metals like gold and silver. A bullion market is a place where exchanges of gold and silver take place over the counter and in the futures market. Trading in bullions market is open 24 hours.

NCDEX and MCX were formed and became active exchanges for trading in commodities in 2003. In a way, NCDEX and MCX operate like the stock exchanges; the only difference being that they deal in commodities rather than in stocks and equity indices. Both the NCDEX and the MCX were regulated by the Forward Markets commission (FMC) till 2016. In the Union Budget 2016, the government decided to merge the FMC into SEBI and since then the two principal commodity exchanges viz. the NCDEX and the MCX have been regulated by SEBI. Let us first look at some key principles on which both the commodity exchanges operate.

One of the key difference between equity and commodity is that one is more hedge or underlying driven and the other is more of trade driven.