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Commodity Markets in India

A large group of people, especially in India, equate commodities with precious metals like gold and silver or crude oil.

However, the commodities space offers much more. Think soyabean, grains, spices, pulses, etc.

Wondering how to invest in commodities? Let's find out...

Investors can invest in commodities via futures contracts or exchange traded products that directly track a commodity index.

Although these investments can be highly volatile and are generally carried out by experienced investors and traders.

Another way to gain exposure is to invest in companies that have commodity-related businesses.

For example, buying Hindalco shares gives exposure to non-ferrous industrial metals like aluminium and copper.

Investors can also invest in commodities via mutual funds. These are funds that invest in a portfolio of commodity-related companies.

For instance, an oil and gas fund would invest in equity shares of companies involved in energy exploration, refining, storage, and distribution.

Note that the returns of directly investing in commodities differ from investing in commodity related stocks. But so does the risk factor.

Commodity investing has its own advantages:

  • Potential hedge against inflation: Inflation, which erodes the value of money, often means higher prices for commodities. Commodities have historically shown healthy performance in periods of high inflation.
  • Diversification: The addition of an asset class that is different from other stocks and bonds can help you better manage market volatility.

Alongside, commodity investing has its own risks:

  • Sensitive to global events: The commodity industry is significantly affected by worldwide competition, government regulations, and economic conditions.
  • High volatility: Issues with liquidity and potential exposure to natural disasters makes the asset class more volatile. Imagine crude oil futures going to negative prices!

Since you are interested in commodities, check out the top commodity stocks in India.

Meanwhile, also check out the below videos where India's #1 trader Vijay Bhambwani discusses whether you should invest in commodity stocks and whether commodity trading is for you.

Shadow Inventories and Commodity Trading.

Should You Invest in Commodity Stocks?

Russia-Ukraine War: How Nickel Broke the Market

Mar 31, 2022

This is the story of how the price of Nickel went insane.

How the Threat of War is Roiling Commodity Markets

Feb 5, 2022

India's #1 trader talks about the geopolitical tensions and its impact on commodity markets.

The Market's Mind Games

Apr 6, 2021

The markets can play tricks and mind games on you. As a trader you need to be aware.

Crude oil: Reality or a bubble?

May 27, 2008

Oil is boiling and people around globe are feeling the heat. What are the reasons behind this up surge in crude price? Oil players are citing various factors such as the weak dollar, U.S. inflation, institutional investor positions in oil and geopolitical concerns as reasons for the steep price rise in crude. Some people believe that speculation may be contributing to the most recent moves in oil prices on the back of larger allocation of their portfolio to commodity speculation by pension and

When Can You Trade Commodities Normally Again?

Mar 25, 2022

In this video, I'll share my view on when you can expect to trade commodities normally again.

Why the US Dollar Matters

Jun 28, 2021

This is why you should closely watch the movement of the US dollar.

The Most Profitable Trades of 2020

Apr 6, 2020

Equities are not the only game in town.