Ever since the dawn of civilization commodities
trading have become an integral part in the lives of
mankind. The very reason for this lies in the fact that
commodities represent the fundamental elements of utility
for human beings. Over the years commodities markets
have been experiencing tremendous progress, which is
evident from the fact that the trade in this segment
is standing as the boon for the global economy today.
The promising nature of these markets has made them an
attractive investment avenue for investors. Earlier investors
invested in those companies, which specialized in the
production of commodities. This accounted for the indirect
investments in commodity assets.
Commodity markets have a huge potential in the Indian context
particularly because of the agri-based economy. With the
government's initiative for agricultural liberalization,
commodities' trading in India has gained increased momentum
in activities. To increase the efficiency of the markets
the Forward Markets Commission (FMC), the governing body
of commodities trading in India has taken several initiatives
for the establishment of national level multi-commodity
exchanges in India.
However the recent attempt by the Government
to permit Multi-commodity National levels exchanges
has indeed given it, a shot in the arm. As
a result two exchanges Multi Commodity Exchange
(MCX) and National Commodity and derivatives
Exchange (NCDEX) have come into being. These
exchanges, by virtue of their high profile
promoters and stakeholders, bundle in themselves,
online trading facilities, robust surveillance
measures and a hassle-free settlement system.
The futures contracts available on a wide spectrum
of commodities like Gold, Silver, Cotton, Steel,
Soya oil, Soya beans, Wheat, Sugar, Channa
etc., provide excellent opportunities for hedging
the risks of the farmers, importers, exporters,
traders and large scale consumers.