If you will look for the present market in India, then you can find that a new system is set for the retail investors as well as traders to join in the commodity derivatives. This is known as MCX or multi commodity exchange. For the traders and retail investors who want to diversify the portfolios they currently have apart from the shares, stocks, property, and bonds; commodities products have showed up as the better option for them. A few months back, this was not really there. This type of choice was having no sense during that period. It was the time when the retail investors were just able to do very little effort in terms of investing in the commodities or share market products or precious metal like silver and gold. Apart from precious metal, there were no other options for the retail investors to invest money on.
But this image has changed when the MCX was declared for the country. This has made it possible for the retail investors to invest in the commodity futures and for this don’t even need to have the physical stocks. As far as the commodities are concerned, they really provide a great prospective to appear as a exclusive asset for the market and with the MCX.
However, retail traders claiming to have a excellent knowing about equity markets may say that commodities have offered produced an uncomfortable market for them to deal with. It’s true that commodities are still considered as the less recognized industry elements. Must basic principles related to supply and demand of commodity can even produce some kind of challenge. So, it’s always better for the retail investors to have a excellent understand about the advantages and risks associated with the investment in share futures.
They need to equip themselves with such knowledge before they can actually take a leap into this business. History even suggests that commodities futures pricing has always remained less volatile with comparison to the bonds and equity. This is the big reason why commodities futures have managed to produce such a groundbreaking option for the retail investors to go for portfolio diversification.
The industry dimension for commodities futures in India is really significant. As per the recent data different commodities in this country have come up about Rs 1, 50,000 crore of annual turnover. And as the future trading is introduced now for the MCX, the commodity market size will also grow significantly later on. Just similar to the other markets, stock future trading, commodity market, also plays an important role for risk sharing and pooling. This market has provided a great system for the sellers and buyers of commodities. This process is also what making the market for commodity futures more liquid.
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