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Introduction
to Commodities
in India
Major Commodity Exchange
Major Commodities
Benefits of Commodity Markets
• Investors
•Diversification - The returns from commodities market are
free from the direct influence of the equity and debt
market, which means that they are capable of being used
as effective hedging instruments providing better
diversification.
•Less Manipulations - Commodities markets, as they are
governed by international price movements are less prone
to rigging or price manipulations by individuals
•High Leverage - The margins in the commodity futures
market are less than the F&O section of the equity market.
Benefits of Commodity Markets
Importer or an Exporter
• Hedge against price fluctuations - Wide fluctuations in the prices of
import or export products can directly affect your bottom-line as the
price at which you import/export is fixed before-hand.
Large scale consumer of a product
• Control your cost
• Any sudden rise in the price of raw materials can compel you to pass
on the hike to your customers and make your products unattractive
in the market. By buying commodity futures, you can fix the price of
your raw material.
• Ensure continuous supply
Benefits of Commodity Markets
Producer of a commodity
Lock-in the price for your produce - If you are a farmer, there is every
chance that the price of your produce may come down drastically at
the time of harvest. By taking positions in commodity futures you can
effectively lock-in the price at which you wish to sell your produce
Assured demand - Any glut in the market can make you wait
unendingly for a buyer. Selling commodity futures contract can give
you assured demand at the time of harvest.
Increase in holding power - You can store the underlying commodity
in exchange approved warehouse and sell in the futures to realize the
future value of the commodity.
Where to invest in commodities?
Multi Commodity
Exchange (MCX)
National Multi
Commodity
Exchange (NMCE)
National
Commodity &
Derivative
Exchange (NCDEX)
Indian Commodity
Exchange (ICE)
Ace Derivative
Exchange (ACE)
Introduction to Commodity in India

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Introduction to Commodity in India

  • 4. Benefits of Commodity Markets • Investors •Diversification - The returns from commodities market are free from the direct influence of the equity and debt market, which means that they are capable of being used as effective hedging instruments providing better diversification. •Less Manipulations - Commodities markets, as they are governed by international price movements are less prone to rigging or price manipulations by individuals •High Leverage - The margins in the commodity futures market are less than the F&O section of the equity market.
  • 5. Benefits of Commodity Markets Importer or an Exporter • Hedge against price fluctuations - Wide fluctuations in the prices of import or export products can directly affect your bottom-line as the price at which you import/export is fixed before-hand. Large scale consumer of a product • Control your cost • Any sudden rise in the price of raw materials can compel you to pass on the hike to your customers and make your products unattractive in the market. By buying commodity futures, you can fix the price of your raw material. • Ensure continuous supply
  • 6. Benefits of Commodity Markets Producer of a commodity Lock-in the price for your produce - If you are a farmer, there is every chance that the price of your produce may come down drastically at the time of harvest. By taking positions in commodity futures you can effectively lock-in the price at which you wish to sell your produce Assured demand - Any glut in the market can make you wait unendingly for a buyer. Selling commodity futures contract can give you assured demand at the time of harvest. Increase in holding power - You can store the underlying commodity in exchange approved warehouse and sell in the futures to realize the future value of the commodity.
  • 7. Where to invest in commodities? Multi Commodity Exchange (MCX) National Multi Commodity Exchange (NMCE) National Commodity & Derivative Exchange (NCDEX) Indian Commodity Exchange (ICE) Ace Derivative Exchange (ACE)