The Indian commodity market is worth Rs. 92.23 lakh crore, and if this figure intrigues you, read ahead and learn about commodity trading, what commodities are traded in the commodity market, trading time, and what's the right place to open a trading account or the best commodity broker.
Commodity trading's meaning is quite simple. It is the process of trading raw commodities, metals, and more. For this process, there are two types of commodity markets in India;
- Spot Market: These are physical markets, or you can say cash markets, where traders can exchange commodities for instantaneous delivery.
- Derivatives: It comprises futures and forward contracts; these instruments use the underlying asset (spot market) to let traders buy or sell the asset at a pre-set price on a fixed future date. After the expiration of the contract, the traded assets are physically delivered.
Please Note: The forward instrument can be bought or sold over the counter and customized, while the futures contract is regulated and can be traded only on exchanges.
What commodities are traded in the commodity market?
There are two types of commodities;
- Hard Commodities: Hard commodities are extracted from the Earth; these include metals and minerals, such as gold, silver, copper, etc. Even crude oil.
- Soft Commodities: These are essentially food grains, edible oil, meat, and livestock.
Types of commodities traded in India:
In India, these commodities are traded - gold, silver, Palmolein, castor seed, crude palm oil, mentha oil, rubber, cardamom, black pepper, etc.
Traders can also trade cereals, fibres, energy and gas, oilseeds, and other metals in India.
Exchanges drive the commodity market in India, and every exchange allows only specific commodities to be traded. For instance, traders can only trade in energy on the Multi Commodity Exchange (MCX).
What commodities are traded in India?
The above talked about commodities mentioned are not the only commodities traded in India; the complete list of commodities traded in India:
- Foodgrains- Maise (Kharif/ South), Maise (Rabi), Chana, Moong, Barley, Wheat, Paddy (Basmati), etc.
- Metals- Gold, Zinc, Silver, Copper, Lead, Nickel, Brass. Some exchanges list gold and silver in the Bullion category.
- Agricultural Commodities- Crude oil, Palmolein, Castor oil, Mentha oil, Black Pepper, Rubber, Crude Palm Oil, Rubber, Cotton, Kapaas, Guar, etc.
- Energy- Natural Gas, Crude oil.
- Spices- Pepper, Jeera, Coriander, Turmeric, etc.
Please Note: Guar, Kapaas, and Cotton are classified as fibres according to some commodity exchanges.
Important Commodity Exchanges in India:
- Indian Commodity Exchange
- Multi Commodity Exchange
- National Commodity and Derivatives Exchange
- National Multi Commodity Exchange of India
What principles do you need to follow to trade in commodities:
- Before getting into commodity trading, an individual needs to understand the meaning of commodity trading and further understand the demand-supply factors that affect the daily price fluctuation of these commodities.
- The trader must know the actual demand for the commodity in the local markets. It becomes even more crucial if someone is trading in gold. Moreover, if it is gold, the individual needs to understand that global factors like the yield movement on US Treasury bills also affect gold prices throughout the world.
- Trading commodities is a risky game; one should carefully study the implications of the leverage he/she will be availing of while trading.
- Finding the right commodity trading platform is also crucial for commodity trading. You would need to make a lot of decisions right, for which you would need the right support and insights, which you can only get from your commodity trading platform, so choose wisely.
Indian Commodity Trading Time
The foremost thing that you must know is that commodity market hours are much longer. Let's have a look at some important aspects of commodity market timings.
Commodity Trading Time: Market Hours
For commodity trading time, let's look at the actual timing of the commodity market in India.
Trading in the commodity derivatives segment of the exchange takes place all weekdays (Monday-Friday), excluding weekends (Saturday-Sunday) and Exchange declared holidays. The Indian commodities market timings of the commodity derivatives segment are:
- Normal Market Open: 09:00 hrs
- Normal Market Close: 23:30 hrs
Where to open a commodity trading account?
Choosing the right commodity broker is the most important part of the investment experience. The vast scope of the market has brought in employment for many brokers.
But credibility and experience are crucial for the good impression of a broker. Every investor must do thorough research while selecting a broker or online commodity trading account.
Brokerage charges may vary from place to place and client to client. Therefore, choose a broker wisely, and look for offers and fee waivers.
How to choose an online commodity trading account?
Before signing up for any broker or online commodity trading account, the investor must check the platforms or media through which the investment is going live.
A demo of the application is a must for novice investors. In India, the investments could go live on the MCX (Multi Commodity Exchange) when the trader is using MCX broker services or other exchanges such as NCDEX, NMCE, etc., depending on the commodity broker.
Since you are investing money, it's a big affair, and you would need a broker with a strong and proactive customer support team. Apparently, if an investor relies completely on a broker without proper market research, it may put the investor at losses. You must select the right certified commodities broker.
Turn to Choice Commodity Trading
As a registered commodity broker with MCX & NCDEX, Choice Broking offers a Commodity Trading Account for trading/investing in Commodities per your objectives and goals.
The Research and fundamental team observes worldwide news and develops effective analysis to furnish dependable research. Choice India works to make commodity trading easy and effective for you.