|
|
|
What Are Derivatives?
|
|
The term 'Derivative' indicates that it has no independent value, i.e. its value
is entirely 'derived' from the value of the underlying asset. The underlying asset
can be securities, commodities, bullion, currency, livestock, etc. Derivatives can
be traded in the form of Futures, Options or its variants unlike commodities trading.
|
|
|
|
Commodity Derivatives |
Commodity derivatives have had a long and a wide-spread presence in India with commodity
trading being one of the most popular ways of investment. The commodity derivative
market has been functioning in India since the nineteenth century with organized
commodity trading in cotton through the establishment of the Cotton Trade Association
in 1875. However, commodity trading in India has recently developed with commodity
news and online commodity trading.
Currently there are 4 national level multi commodity exchanges which are included
in 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). Commodity trading in India takes place with
a constant reflection of the prices through commodities news and commodities charts.
There has been a substantial jump during recent times in commodity trading through
volumes of commodities from Rs. 5.71 Lakh Crore in the first year in 2004-05 to
Rs. 48.2 Lakh Crore in 2008-09 and to Rs. 119.5 Lakh Crore in 2010-11. Currently
the Average daily Turnover is about Rs. 45,000 Crores and is expected to grow over
a period of time. Live commodity prices can be seen on portals that support online
commodity trading.
|
|
|
|
Commodity Spot Market |
In contrast to Derivatives market, spot market is where buying and selling of
physical commodities takes place whether it is agri products like grains, pulses,
seeds, spices, sugar, etc., or whether its metals or bullions. In short
it is the actual physical markets 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 trading just like in equities where Agri, Bullion and other Metal contracts
are listed for trading and where an investor can buy and get delivery of these commodities.
Commodity Spot Market Trading 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 in these E-Series contracts in Demat form.
To know more about trading in Commodity Spot Market, click
here
|
|
|
|
Why Invest in Commodities? |
|
Core Objective:
|
|
|
|
Hedging - |
|
|
|
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: Eg. A Gold
Jeweler may buy futures contract and fix his cost price of buying gold which would
be used to make jewelry.
|
|
|
|
Direct Exposure:
|
|
|
|
The commodity derivatives market offers an alternative to directly invest in commodities
rather than in the companies that deal in those commodities. This is an important
objective of commodity trading in India. |
|
|
|
Simple Analysis:
|
|
|
|
It is easier to forecast the live commodities price, based on their demand and supply
forecasts 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. Through commodities charts, it becomes easier to follow the forecasts.
|
|
|
|
Leverage – Small Investment & Bigger Return Potential: |
|
|
|
Derivatives, being a leveraged product to invest in, require only a small sum of
money to enter into contract. These derivatives can be monitored through online
commodity trading. |
|
|
|
Portfolio Diversification: |
|
|
|
For investors, commodities trading can also be an attractive and alternative asset
class to diversify their portfolios. Commodities trading in India, especially gold
has been observed to have an inverse correlation with the stock markets, indicating
that it is an asset looked upon as a safe haven against Financial, Economical and
Geo - Political tensions.
|
|
|
|
Precious metals in Demat form: |
|
|
|
Through the E-series contracts, investment in gold and silver is possible with delivery
in Demat form and that too in small quantities. 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 |
|
|
|
|
THE SUSHIL ADVANTAGE |
|
|
Vigilant Tracking of the international and domestic markets and
up-to-date market information & commentary through live commodity prices. |
|
|
|
|
|
Bouquet of Research Products: Highly skilled Fundamental and Technical
reports and analysis, Intraday SMS calls and timely market alerts. Wide range of
research products to choose from depending on the type of trader you are.
|
|
|
|
|
|
Execution: Convenient, secure and efficient trading in a personalized
environment. It is our endeavor to provide a complete range of commodity instruments
through online commodity trading which are traded, to our esteemed clients to suit
their preferences and needs of having a well-structured risk management programme.
|
|
|
|
|
|
|
|
|
|
|
|
|