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After equity and derivatives, commodity trading has shown a significant increase in volumes as can be understood by the fact that the scale of the commodity business has grown from 5 lac crore to above 125 lakh crore in the last 5 years.
One of the attributing factors for the steep increase in business is that over the years investor knowledge has grown significantly in commodities and this has led to a wider participation by investors in the commodity markets. In the last couple of years most of the commodity prices specially gold and silver has seen an astronomical increase in the price. Gold in recent times has acted as a good hedge to balance investor portfolio and over a period of time various investments products have been introduced in the markets, which have further aided long term investors to actively invest and trade in commodities.
In India the commodity derivatives market is relatively in its nascent stage but, due to the fact that India is pre-dominatingly being a commodity oriented country and with its strategic location between the eastern and western markets, there is huge information flow about the global fundamentals affecting commodity prices, commodity turnover has tremendous potential to further grow in india. Currently there are 4 national level multi-commodity exchanges that are included in the commodity trading in India: national multi-commodity exchange of India (nmce), national commodity and derivatives exchange (ncdex), multi commodity exchange (mcx) and indian commodity exchange (icex) and there are still a few yet to be fully established |
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| Our Clients’ Experience |
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Why Invest in Commodities? |
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Core Objective: |
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Hedging - price risk management |
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Commodity derivatives is an effective tool for producers, consumers, suppliers etc of the related commodities to hedge their risk and protect themselves against unexpected and uncertain volatile price movements by monitoring commodity news and commodity charts. They can hedge raw materials/ finished goods and/or inventories: e.g. A gold jeweler may buy future contracts and fix his cost price of buying gold which would be used to make jewelry. |
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Direct exposure: |
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The commodity derivatives market offers an alternative to directly trade in commodities rather than in the companies that deal in those commodities. |
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Simple analysis: |
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It is much simpler to understand the impact of major economic factors that affect the commodities prices thereby making it easier for the trader to take a holistic view on the market, based on one’s analysis about the economic data, demand, supply etc. As compared to forecasting the price of the shares of a company which depend on various factors beyond demand and supply of the products they manufacture and sell. Commodity trading and price forecasting also can get a lot more efficient based on simple technical chart patterns and analysis |
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Leverage – small investment & bigger return potential: |
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Derivatives, being a leveraged product , require only a small sum of money to enter into contract there by making the return on investment potential high in case of a profitable view these derivatives can be seamlessly traded/executed through our efficient online commodity trading platform |
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Portfolio diversification: |
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For investors, commodity trading can also be an attractive and alternative asset class to diversify their portfolios in order to bring some stability to the portfolio. Commodity prices especially gold has been observed to have an inverse correlation with the stock markets, and the us dollar indicating that it is an asset looked upon as a safe haven against financial, economical and geo - political tensions. . It is also considered as an alternate currency and an hedge against inflation. |
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| Commodity Spot Market |
In contrast to derivatives market, spot market is where buying and selling of physical commodities takes place whether it is agricultural products like grains, pulses, seeds, spices, sugar, etc., or whether its metals or bullions. In short it is the actual physical market of the underlying commodities which form the basis for derivatives market.
Sushil finance offers investment in commodity spot market through national spot exchange ltd. (nsel) which is promoted by mcx. Nsel has an electronic screen based platform for commodity trading just like in equities where agri, bullion and other metal contracts are listed for commodity trading and where an investor can buy and get delivery of these commodities. Commodity trading in spot market has gained significance because of the recently introduced e- series contracts which are mini contracts in bullion and metals. As an investor, one can take delivery of these e-series contracts in demat form.
Through the e-series contracts investment in gold and silver is possible with delivery in demat form in small quantities e.g. E-gold-1gram, e-silver-100grams. This makes it ideal for sip form of investing, besides long term view on bullion can be taken without the hassles of mark-to-market, expiry, rollover, etc. Which are prevalent in the derivatives market. To know more about trading in commodity spot market click here. |
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SUSHIL FINANCE ADVANTAGE |
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High quality technical and fundamental research reports. |
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Dedicated relationship managers to handhold and guide investors into various aspects of commodity trading. |
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Availability of 1 hour of free orientation for clients on gamut of services offered under commodity trading. |
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Efficient online trading platforms for commodity & currency trading for clients |
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