Commodities are growth engines and critical drivers of Indian economy in the coming two or three decades and ‘futures’ trading facilitates hedging and risk mitigation, besides opening up another avenue of investment, according to The Hindu-Business Line expert G. Chandrasekhar.
At an awareness programme on ‘Stakeholder awareness and education about agribusiness and commodities’ organised by The Hindu-Business Line at the Andhra Chamber of Commerce, in association with Forward Markets Commission and the NCDEX, here on Thursday, he detailed all the salient features of Futures Trading.
M. Muralikrishna, president of the chamber, said there was a need to conduct more such programmes to enhance awareness about the commodities market.
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N. Venkateswarlu, president of Siddharth Academy, said commodities market had assumed great importance of late.
The experts first explained the macro economic situation and how India was going to emerge as a major economic force in the coming decades, with its young population and other advantages such as growing global competitive edge of Indian corporates. Robust GDP growth and healthy foreign exchange reserves were the other encouraging indicators.
They said that food, textiles and clothing, housing and infrastructure, and energy were the main sectors which would drive the economy in the future and they were all related to commodities.
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Hedging would help in protecting the existing profit margin though it would not ensure any windfall for the trader.
Deepak Sayana, Deputy Manager of the NCDEX, explained how ‘futures trading’ was conducted through the commodities exchanges and the advantages of trading through the exchanges rather than bilateral trading. Commodities exchanges lowered transaction costs, standardised the contract size, and also eliminated the credit risk, he added.