Commodity Futures
are contracts to buy/sell a specific quantity of a particular commodity at a future date. It is exactly similar to the
Index futures and Stock futures but the underlying here happens to be
commodities instead of Indices and
Stocks.
Commodity futures market has been in existence in India for over centuries now. The Government of India banned futures
trading in certain commodities in the
70s. However, trading in commodity futures was again permitted again
by the government in order to help the commodity producers, traders and investors. It is interesting to note that World-wide, the commodity exchanges originated much before other financial exchanges. Infact most
of the derivatives instruments had their birth through the commodity exchanges.
Commodities are the best option for those who want to diversify their
portfolios beyond real estate, bonds and shares. Commodities can be an
unfathomable market for retail investors who claim to understand the equity
market. But commodities become convenient to understand if you are well-versed
with the fundamentals of demand and supply. We suggest you not to take a leap into
commodity futures if you do not clearly understand the risks and advantages of
commodity trading. Commodities futures provide an efficient portfolio
diversification option because their pricing is less volatile as compared to the
equity and bond markets.
Commodities market is growing many folds with the introduction of futures
trading. You have three options to trade in Commodity Futures – the National
Commodity and Derivative Exchange, the Multi Commodity Exchange of India Ltd
and the National Multi Commodity Exchange of India Ltd. All three have a
national presence, settlement systems and electronic trading. You can opt for a
brokerage firm that is already established and has sought membership with NCDEX
and MCX. The minimum investment required in commodity futures can be as low as
Rs.5,000. You will need only one bank account to start trading in the commodityfutures market. If you are dealing with a broker then you have to enter into a KYC
with the broker as a part of the account opening process and just like in
stocks, you can open a separate commodity demat account with MCX and NCDEX.Investors
can refer daily financial newspapers for information on commodities.
Founded in 2005, ABans Group has grown from being
a trading house to a dynamic and diversified business group. We provide
expertise in Broking Services, Merchant Banking, Non-Banking FinancialDealings, Gold Refining and Realty and Infrastructure. In a nut shell Abans
Group is a comprehensive Financial Services and Solution Provider, which aims
to provide an end-to-end financial solution to all its clients.
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