Mumbai: If stocks are not helping you make money, may be raw materials could. Even when the BSE Sensex dipped by 12.13 per cent, the top traded commodities have surged by 16.28 per cent, as per the average year-to-date returns on February 27, 2008. Run-up to Budget 2008-09
If one considers spot trading of commodities such as gold, silver, crude oil, steel, copper, guar seed, chana, aluminium and groundnut oil at the Multi-Commodity Exchange, most of them have returned between 5-30 per cent on a year-to-date basis.
That commodities such as gold, silver and crude oil have touched their all-time highs prove that the sluggishness in equity markets does not reverberate in the commodities market.
"This is not just an Indian phenomenon. Equity markets have been beaten globally. So, there is a perception change among investors. They are shifting from equity markets to commodity markets - from paper-based assets to actual assets," said Shailendra Kakani, head, Commodity Research Group.
"The run-up has been in base and precious metals, which are investor-friendly metals that compete with currency and stocks. The gloom in the stocks has forced people to turn to gold. The uncertainty in the equity market is likely to help the commodities boom," Kakani said.
He predicts that, during the rest of the year, commodities such as gold and silver are likely to give better returns.
Pranav Mer, an analyst with India Infoline Commodities, said, "Commodities can be traded by normal investors as well. There are smaller size contracts such as gold-mini and silver-mini futures contracts, which have a margin of 5 per cent, which would be between Rs 6,000-10,000."
Delivery is not a compulsion, and at the end of the contract, one can square off positions in case of base metals and others do not require delivery, Mer added.
But for investors willing to jump into the commodity pool, Kakani has a warning, "Please don't play with leveraged fund. The commodities market is witnessing a bull run, but investors should bear in mind that volatility is going to be supreme. If one is not ready with funds, one should avoid trading," he added.
If one considers spot trading of commodities such as gold, silver, crude oil, steel, copper, guar seed, chana, aluminium and groundnut oil at the Multi-Commodity Exchange, most of them have returned between 5-30 per cent on a year-to-date basis.
That commodities such as gold, silver and crude oil have touched their all-time highs prove that the sluggishness in equity markets does not reverberate in the commodities market.
"This is not just an Indian phenomenon. Equity markets have been beaten globally. So, there is a perception change among investors. They are shifting from equity markets to commodity markets - from paper-based assets to actual assets," said Shailendra Kakani, head, Commodity Research Group.
"The run-up has been in base and precious metals, which are investor-friendly metals that compete with currency and stocks. The gloom in the stocks has forced people to turn to gold. The uncertainty in the equity market is likely to help the commodities boom," Kakani said.
He predicts that, during the rest of the year, commodities such as gold and silver are likely to give better returns.
Pranav Mer, an analyst with India Infoline Commodities, said, "Commodities can be traded by normal investors as well. There are smaller size contracts such as gold-mini and silver-mini futures contracts, which have a margin of 5 per cent, which would be between Rs 6,000-10,000."
Delivery is not a compulsion, and at the end of the contract, one can square off positions in case of base metals and others do not require delivery, Mer added.
But for investors willing to jump into the commodity pool, Kakani has a warning, "Please don't play with leveraged fund. The commodities market is witnessing a bull run, but investors should bear in mind that volatility is going to be supreme. If one is not ready with funds, one should avoid trading," he added.
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