KEY BENEFITS OF COMMODITIES AT SHAREKHAN :
- One Trading Platform for Both Equity & Commodities.
- Complete online support.
- Cutting edge analysis of the most relevant news in commodities.
- A excellent information facility through SMS messages provides you with appropriate market information as well as buy/sell calls.
- A team of dedicated Relationship Managers/Dealers provide you non-stop support through messenger. You will be assisted on market information, buy/sell recommendation and other information to guide you through.
Welcome to a whole new world of opportunities!
The process of economic liberalization in India began in 1991. As part of this process, several capital market reforms were carried out by the capital market regulator Securities and Exchange Board of India. One such measure was to allow trading in equities-based derivatives on stock exchanges in 2000. This step proved to be a shot in the arm of the capital market and volumes soared within three years.
The success of the capital market reforms motivated the government and the Forward Market Commission (the commodities market regulator) to kick off similar reforms in the commodities market. Thus almost all the commodities were allowed to be traded in the futures market from April 2003. To make trading in commodity futures more transparent and successful, multi-commodity exchanges at national level were conceived and were allowed to start futures trading in commodities on-line.
A lot of water has flown since then. Today commodities exchanges have become an integral part of Indian financial system. Their volumes have gone through the roof; from a humble `.5000 crores in 2003 today it stands north of `.27 lac crores per year. This rise in volumes has been led by bullion (gold and silver) trading. Simultaneously, MCX has emerged as the second largest commodity exchange in the world in terms the number of silver contracts traded. Similarly it is the third largest commex in the world today considering the number of gold contracts traded.
There is yet another feather in the cap of Indian commexes; while the American commexes still continue to have open outcry system, Indian ones have begun in style, with every aspect of trading fully computerised. Thus you have trading engines which match buy and sell orders at the nanosecond basis.
Coming to commodities, today Indian investors can trade in a great number of commodities on these bourses, and the list is getting bigger by the day. No wonder then that the commodity futures market is being viewed as a significant business segment by many– businessmen, investors, institutions, brokers, banks et al.
In spite of all this flurry of activity during past three-four years, the awareness about commodities remains low. Many investors are still not aware that they can invest in commodities as diverse as gold, silver, jeera, and cotton with the click of a mouse, right from the confines of their living room. No doubt many are unaware that commodities are completely unrelated to other investment vehicles and thus can act as a buffer in the times of crisis.
The subsequent web pages are prepared to spread the word about commodities as well as to advise the seasoned traders about the latest news and analysis in commodities world. It is expected that these pages will help both novice and experienced investors / traders / hedgers/ arbitrageurs to get the best mileage out of investing in commodities.
Why Trade In Commodities?
Although commodity derivatives command a humble share of 6% in the derivatives segment across the world, yet these record high volumes in the markets the world over compared to equity derivatives. In an era where risks to investments are on the rise, India needs to switch to commodity derivatives and also to weather derivatives (when these are launched), if it needs to top the list of developed nations.
Of course with the other asset classes offering attractive returns, "Why Commodities?" is the inevitable question that pops in one's mind today, more so considering that the BSE Sensitive Index is scaling new highs by the day. Well, despite offering relatively lower returns, commodity derivatives provide unique money-making opportunities to a wider section of market participants, starting from planters to exporters, importers et al. And to the agrarian Indian population commodities are obviously not new, nor are the advantages of trading in them unknown.
- No balance sheet, P&L statement, EBITDA and reading between the lines. Commodity trading is about the simple economics of supply and demand.
- Supports are known, only resistance matters! Minimum support price acts as a statutory support for many commodities.
- No Dollar-Rupee premiums/discounts. No hedging on the NYMEX. Indian commodity derivatives hedge both forex and commodity specific risks at a single cost.
- No breaking of heads over market direction. Seasonality patterns quiet often provide clue to both short- and long-term players.
- No scam, no price rigging. Commodity trading comes with nil insider trading and company specific risk.
What's more, why invite risk by investing in a metal company when you can trade in the metal itself? After all, while the stock price of the company is dependent on several factors including the company's own fundamentals, the price of the metal is driven by the simple economics of demand and supply. The more the demand for the metal, the higher its price and vice versa. Also compared to equities it is much cheaper to trade in commodities, where margin requirements are lower.
