Jun 2,2020 By: ATHUL RAJEEV, VENTESKRAFT
In this blog we will go through about Indian Commodity Market. It’s a market where traders buy and sell commodities. Commodities are raw materials or primary agricultural products. In other words, things that farmers, mining companies, and oil and gas companies produce or extract.
The commodity market is similar to the equity market. However, in the equity market, people buy and sell shares.
We see commodities all around us. The Indian commodity market influences the price of a gallon of gas and the cost of a cup of coffee bought from Starbucks. In fact, it affects the price of most of the food we consume at home.
Additionally, the Indian commodity market determines the cost of electricity. It matters to all of us. Put simply; it has a major bearing on our day-to-day lives.There are about fifty major commodity markets globally. These markets facilitate investment trade in almost 100 primary commodities.
Investing in the indian commodity market
The oldest way of investing in commodities is with futures contracts. We secure future contracts with physical assets.Investors can also buy shares in companies whose businesses rely on commodities prices.Additionally, we can buy index funds, mutual funds, or ETFs that focus on commodity companies. ETFs stands for exchange-traded funds.The sharp upward or downward movement in prices (in other words, price volatility) is one of the key problems associated with commodities. Price volatility can result from irregular production and harvests as well as from swings in demand and supply. Volatility evokes risks for both producers and consumers.Volatile prices can have a devastating impact on economies. The market for the physical commodity should be free from substantial government control. The commodities where prices are determined by government policies should not be traded on the exchanges.
Indian Commodity prices are affected by many reasons and it is important to understand these factors and the strategies that must be employed before trading in commodities.One should have a clear idea about the demand-supply chain to trade in commodities.While one gets higher leverage, risk associated with commodity trading is also higher.If you are a beginner, take the support of research experts because a thorough knowledge and constant monitoring of the market is necessary.Have clarity on the commodity types list and read extensively on how the price of a particular commodity gets impacted before you begin trading in commodities
