Since last 10 years, the commodity futures market in India and abroad has witnessed a significant increment in terms of both trader’s network and volume. The commodities market survives in two distinguishable forms, the over-the-counter (OTC) market, and the exchange-based market. There exist the spot and the derivatives segments as in equities. Spot markets are OTC markets. In these markets, the participation is limited to the traders who are necessitated with that commodity, such as the farmer, processor, wholesaler, etc. These participants have liberty to choose commodity tips on their own. The exchange-based markets are fundamentally derivative markets and are like equity derivatives in function. In derivative market, an investor can trade with just paying a certain marginal amount of the traded commodity.
Even though there is an allocation for delivery, various contracts are squared-off before expiry and are settled in cash. About 23 commodity and equity exchanges are active in India, carrying out futures trading in near about 146 commodity items. The Government of India recognized the NMCE, Multi Commodity Exchange (MCX), for which MCX free tips intraday are available for investors, and National Commodity and Derivative Exchange (NCDEX), as nationwide multi-commodity exchanges. A total of around 94 commodities were traded in back in 2006 in the commodity futures market, as compared to approximately 59 commodities in earlier 2005. These commodities comprised major agricultural commodities such as rice, wheat, jute, cotton, coffee, major pulses etc. Right now, people prefer to trade in metals and energy in the commodities. Agricultural commodities have their own scope in the capital market.