NEW DELHI (Commodity Online) : In a clear case of scenario changing, small time investors in India are looking at commodity markets more than the traditional equity markets.
Persistently high commodity prices have increased investors interest in the market and even highly volatile trends at the markets didn’t prevent scores of new entrants into India’s lucrative commodity markets.
Analysts said this phenomenon is catching up in India especially among young investors. Large investors in the country have already sought refuge from the risky currency and equity markets to commodities.
Even though it is a difficult type of investing as Individuals trading on commodities are making a bet on the future value of the commodity.
Among young Indian investors, the most popular commodities include gold, silver, oil and natural gas and there are also takers for coffee and cocoa.
These new brand of investors are choosing these most watched commodities as they are not likely to surprise average investors like them, analysts said.
They added that gold, silver and oil are watched closely because their value can determine what is going on with the economy and young investors are good at calculating these risks.
Gold remains the top commodity for young Indians while silver and oil are the next two big bets.
According to Forward Markets Commission (FMC), India’s commodity markets regulator, the number of smalltime players is on the rise in India’s commodity markets, data was not available on numbers.
The FMC Chairman did not say what role retail investors had played in the growth of the exchanges; analysts said small investors have contributed to the growth in turnover.
He said commodities are not purely for investments. Some people use it for risk management.”
Many small time investors in India consider commodities as just a small part of their portfolio or investment plan and not rely heavily on commodities trading.
They are generally entering the market with small investments as they clearly understand that those with the most success are those who invest small and watch their losses.
However, this will help increase number of trades in India’s commodity exchanges. On country’s largest commodity exchange, the MCX, the number of trades executed rose to 210 million in 2010-11, up 31% from the previous year.
India has 24 commodity futures exchanges, including three national exchanges that trade online and the turnover on exchanges in 2010-11 were at Rs 119 trillion
Analysts said learning how the commodities market works is imperative before trying to trade in this market.
Prices in the commodities market are based on supply and demand and investors hope to make a profit from the ever fluctuating prices.
