Commodities Trading in India
Commodity trading in India has emerged in a big fashion. Since the time the ban on commodity trading was lifted in 2003 after 40 years, more and more retail investors are getting interested in this relatively new trading market. Yet, despite the surging demand for commodity trading, quite a good number of retail investors are hesitant about entering into this lucrative trading segment. The prime reason behind this hesitation is lack of knowledge and relatively low profile of it compared to equity market. But commodity trading is equally, if not more rewarding than equity market. Like trading in derivative segment of stock market, investors can also try derivatives in commodity market.
Commodity trading is for those who want to move beyond shares, real estate and bonds. One can trade in oilseeds, crude oil, metals, gold, silver, copper, zinc, agri-commodities like pulse, maize etc in the commodity market. Those who are market savvy do not hesitate in opting for commodity market to build a separate asset class. Like equity market, commodity market also works on the fundamentals of demand and supply. There are three multi commodity exchanges in the country where traders can play the game. Retail investors must understand the risks and advantages of trading in this segment of market. Compared to equities, the fluctuation in commodity market is low so that offers a strong hedge against the underlying portfolio.
If we look at size of the commodities markets in India, the percentage contribution of commodities related industries constitute no less than 58 percent and that is quite huge. With the introduction of derivative trading in commodities market, the size is bound to grow by a significant percentage. One can start trading in commodities at any one of the three exchanges of National Commodity and Derivative Exchange, the Multi Commodity Exchange of India Ltd and the National Multi Commodity Exchange of India Ltd. There are several renowned brokers that offer trading in commodities. One can also use internet to trade in this interesting segment.
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