Commodities markets around the world are ten times bigger than the equity markets. They are less volatile than equity market. Futures trading in commodities is fast spreading into the rural areas of India at a faster pace than stock market operations. India is one of the largest producers of a large number of commodities and has a long history of trading in commodities.
The market is maturing consistently. Commodities future trading help reduce risk from price fluctuations. Due to technological developments and agricultural liberalization, commodity future markets play a vital role in the development of the Indian economy.
The instruments that are traded in the commodity market include bullion (silver and gold), metals (tin, copper, nickel and steel), precious metals, plantations (pepper, jute, rubber, cotton), pulses (chana, gur, tur), oil seeds (Palmolein, groundnut, castor, refined oil, soya bean etc.), wheat, rice, urad, etc. The expiry period of the contract is available for two months and one can settle their trade within the contract cycle. The contract specifications are mentioned for every commodity in respect to the respective exchanges, which tell about the commodity specifications such as purity, tolerance limit, delivery method, delivery center etc. |