Do you want to know how the commodity market works in India? This is a complex question, but we will do our best to answer it. The first thing to understand is that there are different types of commodities. Some examples include metals, agricultural products, and energy products. Each commodity has its unique characteristics and behaves differently in the market. In India, the commodity market is regulated by the Securities and Exchange Board of India (SEBI).
Published on 31 January 2023
OPEN A FREE* DEMAT AND TRADING ACCOUNT
IN 15 MINS*
The commodity market in India is a platform where buyers and sellers trade various commodities. It is an integral part of the Indian economy and plays a significant role in the country's agriculture sector. This blog post will discuss how commodity market works in India.
Let's get started.
Trading in Commodities
Commodities trading is a prevalent form of investing in India. It involves the buying and selling of various commodities, such as gold, grains, oil or even currencies. In commodity trading, investors purchase a certain amount of a commodity with the expectation that its price will increase in the future and they can resell it for a profit.
Types of Commodities Traded in India
The Securities and Exchange Board of India (SEBI) regulates commodity trading in India. In India, commodities are traded on commodity exchanges such as Multi Commodity Exchange (MCX), National Commodity and Derivatives Exchange (NCDEX) and Indian Commodity Exchange (ICEX). The commodities traded in India include agricultural products like wheat, rice, pulses, spices, oil seeds etc.
The non-agricultural products include metals like gold, silver, and copper; energy commodities such as crude oil and natural gas; bullion like gold coins or bars; currency pairs and other financial derivatives.
How Does the Commodity Market Work in India?
The commodity market works much like any other. In India, individuals and businesses buy and sell goods for a profit. People take advantage of the fluctuations in commodity prices to profit from their investments.
In commodity trading, there are two contracts: futures and options. A futures contract is an agreement that requires a trader to purchase or sell a commodity at a pre-determined price on a future date. Options contracts give traders the right but not the obligation to buy or sell a particular commodity at an agreed-upon price within a certain period.
To be involved in commodities trading in India, you must have a Demat account with authorized members called brokers registered with the Securities Exchange Board of India (SEBI). With this account, you'll be able to buy and sell commodities and take advantage of other features, such as leverage trading.
In India, commodity trading is regulated by the Forward Markets Commission (FMC). The FMC ensures that all commodity transactions are conducted fairly and that traders have access to all necessary information, including the commodity's price, how much it costs to purchase or sell, and how long they have until the contract expires.
What Conditions Must One Meet to Participate in the Market for Commodities Derivatives in India?
The only way to trade in commodities derivatives is via a stockbroker registered with SEBI. The actions listed below can be done to begin trading for this purpose:
Selecting a broker, establishing a trading account with such a stockbroker registered with SEBI, and finishing the Know Your Client procedure (KYC)
Understanding the Risk Disclosure Document's elements (RDD)
The Stockbroker issuing a Unique Client Code (UCC)
Making the necessary Margin Deposit with the Broker
Creating a bank account for the receiving and transfer of cash
Only deposit the required margin into the bank and then request a receipt.
Create an account with the Repository to speed up delivery
Benefits of the Commodity Trading Market in India
There are various benefits of the commodity trading market in India. Mentioned below are a few of these benefits:
Low Capital Investment: The commodity market does not require a large amount of capital to start trading. This makes it ideal for those who want to invest small amounts and still reap the benefits of trading in commodities.
High Liquidity: Commodities are highly liquid due to their nature, which means that they can be easily bought or sold at any point in time as opposed to other investment options like mutual funds or stocks. This makes them an excellent option for investors who need quick access to their money without waiting too long.
Price Volatility: Price volatility is one of the major benefits of the commodity markets in India. Prices of commodities can fluctuate significantly depending on various factors, such as supply and demand. This makes it easy for investors to make profits when the prices rise and losses when they fall.
The Bottom Line
The commodity market in India is an important part of the Indian economy, offering investors various ways to speculate and hedge their portfolios. With the right knowledge and tools, traders can take advantage of the many benefits provided by commodity trading in India.
Team Espresso
We care that you succeed
Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.
A commodity can be termed as an asset or a good that is essential in everyday use. Some examples of commodities include food, metals, and energy. By nature, commodities are interchangeable and alternate. It is an object that one can buy or sell, except for money and actionable claims.
The agriculture sector has been the spine of the Indian economy since prehistoric times. And given the evolution of technology and digitalisation, trading in agricultural commodities has become convenient. Today, you can trade agricultural commodities similarly like you do commodity trading for precious metals and others.
Commodities Traded and Its Types in Commodities Market
Did you know that commodities are also traded just like stocks? Did you know that there is a particular commodity market for the trade of commodities? The answer to both these questions is yes. So let us get to know more about the types of commodities traded in a commodity market.
A commodity can be termed as an asset or a good that is essential in everyday use. Some examples of commodities include food, metals, and energy. By nature, commodities are interchangeable and alternate. It is an object that one can buy or sell, except for money and actionable claims.
The agriculture sector has been the spine of the Indian economy since prehistoric times. And given the evolution of technology and digitalisation, trading in agricultural commodities has become convenient. Today, you can trade agricultural commodities similarly like you do commodity trading for precious metals and others.
Commodities Traded and Its Types in Commodities Market
Did you know that commodities are also traded just like stocks? Did you know that there is a particular commodity market for the trade of commodities? The answer to both these questions is yes. So let us get to know more about the types of commodities traded in a commodity market.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
NDNCR Terms & Conditions
By accepting the Terms & Conditions, you authorise Espresso, its representatives and agents to provide information about various products, offers and services provided by Espresso through any mode, including telephone calls, SMSes, emails, letters and any other mode of communication. You also confirm that laws in relation to unsolicited communication referred in "National Do Not Call Registry" as laid down by "Telecom Regulatory Authority of India" will not be applicable for such information/communication.
Filing Complaints on SEBI Complaint Redress System (SCORES) - Easy and Quick
Register on the SCORES portal
Mandatory details for filing complaints on SCORES:
Name
PAN
Address
Mobile Number
Email ID
Benefits:
Effective communication
Speedy redressal of grievances
You can file complaints on SCORES through https://scores.gov.in/scores/Welcome.html