Invest in Commodity
Despite the growing popularity of the stock markets, commodity trading contributes to crucial part of India’s financial landscape. As the name means, commodity trading comprises buying and selling of goods used in everyday life. The tradeable commodities include gold, silver, crude oil, natural gas, copper, zinc, nickel, guar seed, guar gum, cotton seed oilcake, soybean, wheat, and many more.
Commodity trading offers traders and investors an opportunity to diversify their portfolios. Since commodity prices fluctuate inversely from stocks, many investors turn to commodities markets as a hedge against inflation. With the advent of exchanges, commodity trading has transformed into a structured and regulated system. While people once used to purchase and stored physical goods, modern investors now trade commodity derivatives through exchanges, making the process more efficient and accessible.
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What are Commodity Exchanges?
Similar to the stock market, commodity trading requires a dedicated marketplace where buyers and sellers can trade. A commodity exchange is a platform for purchasing and selling various commodities. In India, there are two national commodity exchanges for trading commodities
- Multi Commodity Exchange also known as MCX
- National Commodity and Derivatives Exchange or NCDEX
How to do Commodity Trading?
Just like equities, commodities can be bought and sold in the market. To begin trading in the commodities market, one must open a commodity trading account with Religare who is a member of both commodity exchanges. Once the account is set up online, traders can trade a variety of commodities.
Investors can trade using futures or option contracts, where they agree to buy or sell a predetermined quantity of a commodity at a fixed price on a settlement date in the future.
Traders can participate in commodity trading through various instruments such as futures contracts, options, commodity ETFs, or by directly buying and selling physical commodities.
The Commodity Markets in India opens from Monday to Friday between 9:00 a.m. and 11.30 p.m. or 11.55 p.m. IST, as per the U.S daylight saving time.
What are the benefits of Commodity Trading?
Commodity trading has many benefits and is a great avenue for investors to increase their financial pool. Here are some of its advantages.
- Allows Diversification: Diversification is an essential part of every portfolio as it helps investors counter the risk of some investments. Commodity trading offers the ideal playground for diversification, thereby reducing a portfolio’s risk probability.
- Eliminates the Risk of Manipulation: Commodity markets are generally regulated by international price movements which take out the possibility of any internal price manipulation.
- Protection against Inflation: During periods of high inflation, stock prices decline. However, with inflation, the price of commodities increases. Therefore, trading in commodities is advantageous when inflation is on the rise.
Trade with India’s Leading Commodity Broker
- Dedicated Commodity Desk to support in Commodity Trading
- Fast and Secured Trading platform
- Award winning Research
- Bullions, Metals, Energy, Agri trading at one place
Why invest with Religare Broking?
Religare Broking offers online commodity trading options with many benefits, such as:
- A smart portfolio tracker that gives accurate, up to the minute reports of your investments.
- Commodity reports with essential trading information that can help individuals pick the right commodities for trading.
- The ease to trade from a phone, tablet, or laptop.
- No hidden transaction fees.
Religare Broking Research
Thorough research and a deep understanding of the market are essential for successful investing. Religare Broking provides the expertise by its seasoned professionals, who conduct regular on-the-ground research to help investors make informed decisions.
Leveraging extensive market analysis, our team delivers real-time recommendations and advanced research insights tailored to investor’s unique financial goals.
What are the various types of commodities to trade in?
Bullion
Gold and Silver : Where Wealth Meets Elegance : Add in your portfolio
Base Metals
Boost your portfolio with Copper, Zinc, Lead, Aluminium etc
Energy
Powering your portfolio with Crude and Natural Gas
Agri
Harvest the benefits of trading in wheat, corn, guar, Soybean and more
Frequently Asked Questions
A commodity exchange is an association or a company or any other body corporate that enforces rules and regulations for trading commodity contracts and interconnected investment products.
Commodity trading in India is regulated by the Securities and Exchange Board or SEBI. In addition to this, the Commodity Derivatives Market Regulation Department or CDMRD overlooks the everyday operations of trading.
Commodity Market participants can be classified into three major categories i.e. hedgers, arbitragers, and speculators. In other words, manufacturers, traders, farmers, exporters, and investors are all the participants in this market.
Transactions in commodity exchanges are based on the online trading system. It is an order-driven trading platform, which is reachable to the various participants through the internet, VSAT, and leased line modes operated by members or subbrokers spread across the country.
Commodity trading lets individuals place comparatively bigger bets with a small amount of money. This increases their chances of earning significant profits. These investments also offer liquidity.
A derivative is a product where the derivative value is derived from the value of one or more underlying variable or asset in a contractual manner. The asset can be equity, foreign exchange, commodity or any other asset.
Commodity futures are like index or stock futures. They serve as a contract to buy and sell commodities at a future date and time.
Futures prices are determined by the interaction of bids and fluctuations in that asset across the country which converges on the trading floor. The bid and offer prices are based on the fluctuations of prices on the maturity date.
Farmers, investors, importers, exporters, large scale consumers like jewellers, textile mill owners, agricultural credit providing firms, speculators, etc. commonly trade commodities in India.