Read important information here before investing in the commodity market of India

If you want to invest your hard earned money in the commodity market of India, then before investing your money, read this article carefully to know about all the details of commodity market in India.

Created On: Jul 16, 2021 21:12 IST

Know about Commodity Market and tips to invest in it

Know about Commodity Market and tips to invest in it

Investing in commodity trading can be done on commodity stock exchanges in our country. As the name of Commodity Exchange suggests, it refers to the trading of goods/commodity. In the context of the financial market, it simply means the formal exchange of goods, that is, trading on a commodity exchange. Investors can invest their money in the commodity market in many different ways. Commodities are shares issued by companies, mutual funds, or exchange-traded funds (ETFs) that can be bought by investors to protect themselves from the risk of inflation in the future. If you are also one of the few such investors who are seriously considering investing their money in the commodity market of India, then in this article we are giving you all the important information about the commodity market.

what is commodity?

In simple words, basically any ‘object’ is a group or property of all the items of everyday relevance/need like food, energy, furniture or metal. However, it has to be interchangeable in nature ie (accessible to give and take) so that it can be traded. Except for actionable claims and money, any commodity i.e. commodity can be classified as all kinds of movable goods which can be bought and sold. Your clothes, shoes, furniture, all food items and medicines, soap, oil etc. are all such commodities which are continuously traded or traded in the country and the world.

Where to invest in commodities?

All types of commodities are traded on commodity trading exchanges in India. Here is a list of some of the popular commodity trade exchanges for your convenience:-

  1. Multi Commodity Exchange – MCX
  2. National Commodity and Derivatives Exchange – NCDEX
  3. National Multi Commodity Exchange – NMCE
  4. Indian Commodity Exchange – ICEX

Benefits of Investing in the Commodity Market of India

You get many benefits by investing in the commodity market of our country such as:

  1. Protection against inflation – Commodities traded on commodity exchanges protect investors from the ill effects of inflation/inflation.
  2. Hedging against price fluctuations Import and export as well as product price fluctuations can affect the commodity market. Investing in commodity futures helps investors to buy or sell a commodity at a price decided months before the actual transaction. This technique is known as hedging in the commodity market.
  3. Diversification – Investing in commodities allows investors to diversify their investment portfolio in respect of financial securities.

How to Buy Commodity FAQs

  1. To trade in the commodity market, an investor needs to first open a DMAT account.
  2. Commodities are traded in the same way as various stocks are traded in the stock exchanges of India.
  3. There are several ways to invest in commodities, such as commodity futures and options, commodity ETFs, which invest directly in physical commodities.
  4. It is very important for all the investors to pay attention to this point beforehand, which mode of investment will be best suited for their pocket and this method matches their business needs.
  5. Commodity ETFs make trading very easy as they are bought like stocks. However, like the stock prices on the stock exchange, the future prices of various commodities also fluctuate frequently.

*Disclaimer – All this information is presented in this article only to enhance your financial knowledge and understanding. It should not be taken as financial advice by any person.

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