subject: Commodity Market In India: An Insight [print this page] A Commodity market is a place where primary products are traded. Trading of commodities has two different trading concepts such as the direct physical trading and derivatives trading.
The commodity market in India has both the wholesale and retail market. It assists in multi commodity exchange throughout the country and outside the country according to the needs. It is a resource which the investors can make use of, to invest money. The stock market in India has experienced various changes due to the global economic conditions around the world. Demand for the commodities is predicted to grow up to 4 times larger in the next 5 years, than the demand in place now.
Wholesale market in India is considered to be a very important part of the Indian commodities market. There was a time when the manufacturer sold their goods to the wholesaler and then the wholesaler sold it in return to the retailer, who at last sold it to the consumer. Different new concepts emerging today have made the people feel that wholesale market is not that impressive which has resulted in the gradual fall of it.
The retail market in India is in boom at present due to the growth in the commodity market of India. Several government policies have made sure that this retail market grows at a fast rate. The increasing population of the country, who has more buying power, is another reason for its boom. Foreign direct investment in this retail market sector is considered another factor for the high raise.
Commodity trading is considered another good option for those who would like to vary from the regular trading options such as shares and bonds. The government for trading purpose has permitted almost every commodity. There are three main multi commodity exchange authorities in the country. These include:
[NCDEX]-National Commodity and Derivatives Exchange
[MCX]- Multi Commodity Exchange
[NMCE]- National Multi-Commodity Exchange
The commodity market in India has 3 different categories of participants in the market such as the hedgers, speculators, and arbitrageurs apart from the brokers involved who will stand as middle man between the hedgers and speculators.
Hedgers are the ones who do not have too much risk involved, since they might be the producer or the consumer. Producer-hedger are people who would like to alleviate the price raise till they produce their commodity and present it to the market for sale, while the consumer-hedger will do the opposite.
Speculators are the investors who willing buy the stocks at high/low rates than the regular investors, which guarantees the regular investors to sell their stocks when they are in need to.
Arbitrageurs operate in two different markets and gain from the price difference in both the markets.
Investors in the retail market should first consider the risk involved before jumping into making investments. Commodity trading in India is still considered to be at its beginning stage and henceforth needs good and creative ideas to carry on. Liberal policies are believed to raise the commodity trading in the future.
