Commodity Market in India

Commodity Market in India

Commodity Market in India.

India is a commodity-based economy. Commodity Market in India.

Here two-thirds of the one billion population depends on agricultural commodities.

But surprisingly has an underdeveloped commodity market. Best Digital Marketing Course in Indore.

However, there is a little difference between the physical market and future markets trade in the commodity. Commodity Market in India.

Future market trades in a commodity are largely used as risk management (hedging) mechanism.

This mechanism may be on either physical commodity itself or open positions in commodity stock.

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Commodity Market in India

For example, a jeweler can hedge his inventory against a perceived short-term downturn in gold prices by going short in the future markets. Commodity Market in India.

You can understand a commodity as an article, a product or material that is bought and sold.

We can categorize it as every kind of movable property, except Actionable Claims, Money, and Securities.

In fact, the commodities offer a great potential to become a separate asset class for market-savvy investors, arbitrageurs, and speculators. Commodity Market in India.

Retail investors, who claim to understand the equity markets, may find commodities an incomprehensible market.

But in reality, the commodities are easy to understand as far as the fundamentals of demand and supply are concerned. Commodity Market in India.

Retail investors have to understand the advantages and risks of entering into the commodities futures before taking a leap.

Historically, pricing in commodities futures has been less volatile compared with equity and bonds.

Thus, the commodities providing an efficient portfolio diversification option.

The commodity market is an important constituent of the financial markets of any country.

Moreover, the commodity market is having a wide range of products.

One can trade in precious metals, base metals, crude oil, energy and soft commodities like palm oil, coffee etc.

It is important to develop a vibrant, active and liquid commodity market.

This would help investors hedge their commodity risk, take speculative positions in commodities and exploit arbitrage opportunities in the market. Commodity Market in India.

 

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