Commodity Futures trading in India has a long history. The first commodity futures market appeared in 1875. But the new standardized form of trading in the Indian capital market is an attractive package for all the people who earn money through speculation by trading into FUTURES. It is a well-known fact and should be remembered that the trading in commodities through futures' exchanges is merely, old wine in a new bottle. The trading in commodities was started with the first transaction that took place between two individuals. We can relate this to the ancient method of trading i.e., BARTER SYSTEM. This method faced the initial hiccups due to the problems like: store of value, medium of exchange, deferred payment, measure of wealth etc.. This led to the invention of MONEY. As the market started to expand, the problem of scarcity piled up.
The farmers / traders then felt the need to protect themselves against the fluctuations in the price for their produce. In the ancient times, the commodities traded were the Agricultural Produce, which was exposed to higher risk i.e., the natural calamities and had to face the price uncertainty. It was certain that during the scarcity, the farmer, realized higher prices and during the oversupply he had to loose his profitability. On the other hand, the trader had to pay higher price during the scarcity and vice versa. It was at this time that both joined hands and entered into a contract for the trade i.e., delivery of the produce after the harvest, for a price decided earlier. By this both had reduced the future uncertainty.
[...] Today we have an active derivatives market in the segment of stocks and foreign currency, while the trading in the commodities is just standardized. The OTC derivatives in India are well established and the Indian capital markets have acquired the international flavor and the volumes in the derivatives market in at a pace to climb up. A contract bought by paying an upfront margin is calculated as value added risk (VAR) basis, which traces the volatility in the underlying assets (stock or commodities) prices to arrive at margin that is reflected of this volatility. [...]
[...] Chapter-2 Volume Used in conjunction with open interest, volume represents the total number of shares or contracts that have changed hands in a one-day trading session in the commodities or options market. The greater the amount of trading during a market session, the higher the trading volume. A new student to technical analysis can easily see that the volume represents a measure of intensity or pressure behind a price trend. The greater the volume the more we can expect the existing trend to continue rather than reverse. [...]
[...] Gold in India is a second best preferred investment after Bank deposit by individuals, it held, either in form of Bars, Gold coins, Jewellery, etc. In rural economy of India, Gold form as security against loans. Gold as a portfolio Diversifier: the World Gold Council we believe that gold is both money and a commodity, and as such it has a valuable role to play in portfolio risk diversification in Institutional Investment. On a parallel, there are some millions of people who live in countries where gold is an equally important diversifier - against fear, be it political, financial or economic. [...]
[...] Mukesh Ambani, Chairman & Managing Director, Reliance Industries Ltd, MCX offers futures trading in the following commodity categories: Agri Commodities, Bullion, Metals- Ferrous & Non-ferrous, Pulses, Oils & Oilseeds, Energy, Plantations, Spices MCX has built strategic alliances with some of the largest players in commodities eco-system, namely, Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors' Association of India, Pulses Importers Association, Shetkari Sanghatana, United Planters Association of India and India Pepper and Spice Trade Association. Today MCX is offering spectacular growth opportunities and advantages to a large cross section of the participants including Producers / Processors, Traders, Corporate, Regional Trading Centers, Importers, Exporters, Cooperatives, Industry Associations, amongst others MCX being nation-wide commodity exchange, offering multiple commodities for trading with wide reach and penetration and robust infrastructure, is well placed to tap this vast potential. [...]
[...] Bullion trading in India received a major fillip. Following the changes in the Gold Policy announced by the Government of India, in 1997 under export- import Policy 1997-2002. As per the policy, scheduled commercial banks are authorized by the Reserve Bank of India (RBI) to import gold and silver for sale in domestic market without an Import license or surrendering the Special Import License (SIL). Bullion is imported into India by banks and four designated trading agencies acting as canalizing agents and consignees for overseas suppliers, who in turn sell to domestic wholesale traders, fabricators, etc. [...]
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