The future's all about commodities

The future's all about commodities

It may lack the glitz of equity derivatives or the eye-popping bonuses of foreign currency and bond markets that draw the B-school cream. But it’s only a matter of time before commodities derivatives becomes the most wanted sector at campus placements.

In less than a year, well over a lakh people are earning their livelihood from commodities futures-related activities. The promise of a quick buck has even drawn equities traders to commodities trading.

So, how big is commodities? Three national exchanges, a dozen active regional bourses, 2,000 brokers operating 6,000 terminals and 10,000 active traders are tracking commodity prices round the clock. A full fledged regulator has also started functioning with a renewed vigour.

Besides, a new breed of commodity research analysts is busy feeding inputs on what was an opaque market till now. With the need for economic research as well as technical analysis, economists, energy analysts, chartered accountants are in demand in the commodities segment.

Since the industry is at its infancy, freshers often find it easier to pick up commodities research. Besides the exchanges, research professionals are employed by 2,000 active brokers.

Life of a commodity broker could be different from his Dalal Street counterpart. The commission-based day trader is yet to make his presence here. The fundamentals of the market are different from that of the equities market.

A person specialising in soft commodities like tea, sugar may not be able to track the price movement of crude and natural gas. “Commodities market is witnessing a paradigm shift,” said Motilal Oswal of the brokerage Motilal Oswal.

The regulator Forwards Market Commission is also in an expansion mood. Chairman S Sundareshan recently said that 39 senior level officers will be inducted soon.

Many websites and softwares have appeared to support the trading system. Softwares like Metastock, SPSS provide trends, comparisons with regard to the prices.

A beginner with a post graduate degree can expect anything between Rs 3 and 5 lakh a year from the exchanges and brokerages. Kamal Mathur, programme coordinator, Nation Institute of Agri Business Management, said, “NIAM has placed about 10 students last year in different places”.

All national exchanges are euphoric. Jignesh Shah, MD of MCX, said, “Need of the hour is the infrastructure support and banks participation.” Narendra Gupta, chief business officer of the largest exchange, NCDEX, said, “The market should double by end of this year.” Kailash Gupta, NMCE, however wants to go slow, said, “A long-term planning is important, rather than immediate profit booking.”

One can also be positioned as an independent trader, forming a start-up brokerage with a capital of Rs 10 lakh. The payback could be as low as six months, says Pradip Chatterjee of Mega Millenium Multi Commodities — a newly formed outfit.

PR agencies, hired by brokers, are in turn recruiting more hands to service the clients. A few educational institutes have already modified their curriculum to include a section on commodities futures trading. The Mumbai-based Wellingkar Institute has started a course in association with MCX.

The NCFM certificate of the NSE is also preferred by the market participants. Already the first Indian book on commodity futures have been authored by a professor from Jaipur.