Commodities Trading In India
http://economictimes.indiatimes.com/articleshow/1065463.cms
http://economictimes.indiatimes.com/articleshow/1065463.cms
Trade pundits are betting big bucks on the commodity trade . And many believe that it would be the next big thing for investors. Surely, bigger than the stocks because globally the commodity trade is about three times the size of equities.
And in all this expectations of good times the Indian bourses can become the hotbed for global trading. Though Dalal Street giving Wall Street a run for the money, even in the near future, is still a dream. But judging by the way activity in the commodity market is picking up, it could soon rule the investors heart.
Heres a reality check. The Indian commodity market is estimated to be around Rs 11,00,000 crore, which includes agricultural commodities (rice, wheat, soya, groundnut, tea, coffee, jute, rubber, spices, cotton,
etc), precious metals (gold and silver), base metals (iron ore, aluminum, nickel, lead, zinc, etc) and energy commodities (crude oil and coal).
"The aspiration of a strong commodity market is based on the fact that commodities-related industries constitute about 58% of the country's GDP," says Jignesh Shah, managing director, MCX, a Mumbai-based independent commodity exchange.
Currently, the various commodities traded across the exchanges clock an annual turnover of Rs 2,90,000 crore, which includes the high-volume crude oil trade listed recently on the MCX. This figure can grow multifold with the introduction of futures trading and participation of more retail investors.
According to the commodity research site indiancommodity.com, the commodity market is expected to grow at an annual rate of 40% over the next five years. The lucrative commodity futures volumes touch $800 mn a day on an average. This is expected to grow at 100% every year. With FIIs eying the Indian markets in a big way, commodities can also gain unfathomable depth.
With a minimum investment of as low as Rs 5,000 and more than 42 traded commodities on offer for the investor, commodity trading is a hot option. The trading has been further boosted by the emergence of a highly evolved national commodity markets on the lines of NSE.
Besides the three national exchanges -- National Commodity and Derivative Exchange, the Multi Commodity Exchange and the National Multi Commodity Exchange -- there are 22 more exchanges and trading boards recognised by Forward Markets Commission (FMC), the market regulator.
Several high-profile equity brokers have become members with NCDEX and MCX. The names include Refco Sify Securities, Sharekhan, ICICI Commtrade, ISJ Comdesk and Sunidhi Consultancy, and are already offering commodity futures services. Some of them also offer trading through the Internet just like the way they offer equities.
With the WTO regime ushering in a new era in global trade, commodity trading becomes a global phenomenon as price issues cannot be manipulated easily, hence futures and options can be used in trading.
India being a major user of crude oil, (which is the worlds most traded commodity), edible oil and gold can become the hub of such commodities. Every year, India buys $25bn worth of crude oil, $8.5bn worth of gold and $9 bn of edible oils.
And in all this expectations of good times the Indian bourses can become the hotbed for global trading. Though Dalal Street giving Wall Street a run for the money, even in the near future, is still a dream. But judging by the way activity in the commodity market is picking up, it could soon rule the investors heart.
Heres a reality check. The Indian commodity market is estimated to be around Rs 11,00,000 crore, which includes agricultural commodities (rice, wheat, soya, groundnut, tea, coffee, jute, rubber, spices, cotton,
etc), precious metals (gold and silver), base metals (iron ore, aluminum, nickel, lead, zinc, etc) and energy commodities (crude oil and coal).
"The aspiration of a strong commodity market is based on the fact that commodities-related industries constitute about 58% of the country's GDP," says Jignesh Shah, managing director, MCX, a Mumbai-based independent commodity exchange.
Currently, the various commodities traded across the exchanges clock an annual turnover of Rs 2,90,000 crore, which includes the high-volume crude oil trade listed recently on the MCX. This figure can grow multifold with the introduction of futures trading and participation of more retail investors.
According to the commodity research site indiancommodity.com, the commodity market is expected to grow at an annual rate of 40% over the next five years. The lucrative commodity futures volumes touch $800 mn a day on an average. This is expected to grow at 100% every year. With FIIs eying the Indian markets in a big way, commodities can also gain unfathomable depth.
With a minimum investment of as low as Rs 5,000 and more than 42 traded commodities on offer for the investor, commodity trading is a hot option. The trading has been further boosted by the emergence of a highly evolved national commodity markets on the lines of NSE.
Besides the three national exchanges -- National Commodity and Derivative Exchange, the Multi Commodity Exchange and the National Multi Commodity Exchange -- there are 22 more exchanges and trading boards recognised by Forward Markets Commission (FMC), the market regulator.
Several high-profile equity brokers have become members with NCDEX and MCX. The names include Refco Sify Securities, Sharekhan, ICICI Commtrade, ISJ Comdesk and Sunidhi Consultancy, and are already offering commodity futures services. Some of them also offer trading through the Internet just like the way they offer equities.
With the WTO regime ushering in a new era in global trade, commodity trading becomes a global phenomenon as price issues cannot be manipulated easily, hence futures and options can be used in trading.
India being a major user of crude oil, (which is the worlds most traded commodity), edible oil and gold can become the hub of such commodities. Every year, India buys $25bn worth of crude oil, $8.5bn worth of gold and $9 bn of edible oils.