After equity and derivatives, commodity trading has shown a significant increase in volumes as can be understood by the fact that the scale of the commodity business has grown from 5 lac crore to above 125 lakh crore in the last 5 years. One of the attributing factors for the steep increase in business is that over the years investor knowledge has grown significantly in commodities and this has led to a wider participation by investors in the commodity markets. In India the commodity derivatives market is relatively in its nascent stage but, due to the fact that India is pre-dominatingly being a commodity oriented country and with its strategic location between the eastern and western markets, there is huge information flow about the global fundamentals affecting commodity prices, commodity turnover has tremendous potential to further grow in india. Commodity derivatives is an effective tool for producers, consumers, suppliers etc of the related commodities to hedge their risk and protect themselves against unexpected and uncertain volatile price movements by monitoring commodity news and commodity charts. The commodity derivatives market offers an alternative to directly trade in commodities rather than in the companies that deal in those commodities. It is much simpler to understand the impact of major economic factors that affect the commodities prices thereby making it easier for the trader to take a holistic view on the market, based on one’s analysis about the economic data, demand, supply etc.
For investors, commodity trading can also be an attractive and alternative asset class to diversify their portfolios in order to bring some stability to the portfolio. Dedicated relationship managers to handhold and guide investors into various aspects of commodity trading. Availability of 1 hour of free orientation for clients on gamut of services offered under commodity trading.
In the last couple of years most of the commodity prices specially gold and silver has seen an astronomical increase in the price. Commodity prices especially gold has been observed to have an inverse correlation with the stock markets, and the us dollar indicating that it is an asset looked upon as a safe haven against financial, economical and geo - political tensions. Gold in recent times has acted as a good hedge to balance investor portfolio and over a period of time various investments products have been introduced in the markets, which have further aided long term investors to actively invest and trade in commodities.
A gold jeweler may buy future contracts and fix his cost price of buying gold which would be used to make jewelry. Therefore, carefully consider whether such trading is suitable for you in light of your financial situation.