Commodity Trading in India
Commodity trading has an archaic presence in the Indian history and has witnessed a long tenure in the Indian market. Commodity trading was initiated in India and gradually it became popular in the other parts of the world. However ironically it is a truly established fact that India as a nation is not able to maintain or growth the introductions made or achievements introduced. Major breakthroughs have witnessed an early death due to political negligence and lack of strong will. Long years of foreign rule, natural disasters and calamities, lack of sound government policies caused the commodity trading gradually lose it sheen in the Indian subcontinent.
However over a past decade India Incorporation has registered a phenomenal growth and the nation regained its glory not only in the economic front but also emerged as a power national in the terms of socio-economic and politically stable country. On the economic front particularly India has become global leaders in the basic sectors with IT and service industry winning accolades world over. In the same league Commodity trading has restarted in India and apart from various regional exchanges, today India has four national commodity exchanges.
The four national commodity exchanges are, Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), National Multi-Commodity Exchange (NMCE) and Indian Commodity Exchange (ICEX).
The commodity markets in India have become popular as it has recently opened new avenues for retail investors and the traders to participate in commodity derivatives. Investing in shares, stocks, funds, bonds or real estate got too hackneyed and required extreme financial acumen. Trading in commodities comparatively reflects familiarity in trading products, and thus a good option for people who belong to a not so literate and urban class, but have a strong potential in investing with a rich experience of commodity markets gained over the years.
However it was not very rational for a common class to invest in commodities like gold, silver, oil or petroleum in the future markets. Retail investors found it nearly impossible to trade in gold or silver as there were practically no retail avenues for trading in expensive metals or commodities beyond reach. But with the introduction of three multi-commodity exchanges retail investors got complete empowerment to invest in any of the commodities and not hesitate on economic or lack of familiarity front.
Indian commodity trading on its shelf offer a plethora of opportunities to the traders who desire to deviate from standard investing products related to stocks or bonds. It has infact become a separate asset class for the market savvy traders, speculators and investors who look forward to earn the differences in the commodity prices by anticipating the rise or fall of commodity prices in the future keeping natural productions and availability of commodities in the near future. These speculators predetermine the availability of minerals, food grains, metals and other assets and accordingly take the decision when to hoard and when to dispose off the commodities.
On the basis of this decision the commodity markets respond, and the traders benefit by the price variations in the commodities. Currently the commodity trading in India has crossed a Rs. 400 billion mark with the industry growing in leaps and bound.