National Commodity & Derivatives Exchange Limited (NCDEX)

Commodities traded on the NCDEX platform:

NCDEX is technology driven commodity exchange. It’s a public limited company registered under the companies’ act 1956 with the registrar of companies, Maharashtra in Mumbai in April.
NCDEX launched future trading in nine major commodities in December 2003
The trading system on the NCDEX provides a fully automated based trading for further on commodities on the nationwide basis as well as online monitoring and surveillance mechanism.
It supports and orders derivative market and provide complete transparency of trading operations.

NCDEX is regulated by forwarding markets commission in respect of futures trading is a commodity.

The NCDEX commodity market can be classified as the following types of commodities.

NCDEX MD & CEO: Vijay Kumar Venkataraman

• Agricultural products
  • Cereals and Pulses
  • Fibers
  • Plantation Products
  • Others
  • Oil and Oil Seeds
  • Soft
  • Spices
• Non-Agri Products
  • Metals
  • Precious Metals

Products for trading in NCDEX

Trade timings are as follows

NCDEX trades commodity futures contracts having 1 month, 2 months, and 3 months expiry cycles.All contracts expire on the 20^th day of that particular month if the 20^th day is the holiday that contract expires on the previous day of that particular contract.New contracts will be started from the next day of the expiry date of the old contract.

FAQs

What is a commodity?
Commodity means a raw material or primary agricultural product which can crude oil, natural gas, crude palm oil etc. we can buy or sell this product in the commodity market.

How does the commodity market work?
The commodities market works like any other market. It’s physical or virtual space, where one can buy, sell (or) trade various commodities at current or future date. A futures contract is an agreement between the buyer and seller, wherein the buyer promise to pay the agreed-upon sum at the moment of the transaction when the seller delivers the commodity at a pre-decided date in the future.

How to invest in commodities?

• Consult with a professional financial advisor who is familiar with commodities and who do not earn a commission from convincing you to make a particular investment
• Open a brokerage account.
• Determine how much money you are ready to invest
• Deposit money into your brokerage account
• Invest in physical commodities
• Maintain a balanced allocation of assets.
• Don’t hold too much of your money in commodities
• Rebalance your portfolio periodically.

What are the required documents to open a trading account in commodity market?

• Pan Card
• Address Proof
• Bank Canceled Cheque
• Two passport size photos
• Six months bank statement also required 

If you invest in the commodities market, how you’ll get profits?
In commodities market risk and returns are very high. Your profits based on your risk factor.

What is the minimum amount to invest in commodity market?
The minimum amount of capital requirement is depending on the contract size and contract value and in general referred as initial margin. Approximately, the requirement will be around 5-10% for MCX or NCDEX, once your minimum maintenance amount is crossed then you need to top up your account again.

Why should we invest in commodity market?
It depends upon Investor interest, knowledge on the commodities market, and risk bearable capacity. Who can take many risks he’ll get high returns. 

Can NRI trade in commodities?
Yes, one can open an account here in India.

At MCX one has to open NRE account for individuals working in outside India. Documents required to submit as follows:

• Identity card
• Overseas Address Proof is mandatory and has to be self-attested by the applicant.
• NRI needs to open PIS Bank Account with a designated bank.
• Copy of RBI Approval/Permission Letter from the PIS Banker (Attested by the Banker).
• D-mat account details.

Can HUF trade in commodities?
Yes, one can open trading D-mat commodity account in the name of HUF.

Almost all brokers provide this facility.

• Duly filled Trading & D-mat/Commodity form with a photograph of Karta affixed and signed across.
• Pan Card of HUF and Karta.
• Address proof of HUF and
• Income proof: bank statement of HUF indicating its existence.
• Declaration to be given by Karta & all major co-parceners of the HUF. HUF Declaration for D-mat account.
• Karta seal/stamp is mandatory on all the signature fields and on all the proofs provided.
• Karta should sign the Account Opening Form and other documents under the stamp of HUF.

Why can one not invest long term in commodity market?

• Just like another asset as stock and bonds, Investment in commodities doesn’t generate large income for the investor.
• Commodities have fluctuated markets and most volatile security among other assets.
• Commodities are almost double as stocks and four times as volatile as bonds.
• Volatility makes commodities very risky for some traders.
• Disinflationary and deflationary pressures are proving persistent. Assets, like commodities, which act as a hedge against rising prices have become less attractive.

How many commodity exchanges are there in India?
In India – six commodity exchanges are there

• National Commodity and Derivatives Exchange Ltd. (NCDEX)
• Multi commodity exchange of India Ltd. (MCX)
• National Multi Commodity Exchange
• Indian Commodity Exchange
• ACE Derivatives Exchange
• Universal Commodity Exchange