CHAPTER 2F (Part 2) : Market Fundamentals - Segments of Market

Commodity

Commodity trading in India is from the primitive times which transformed from the old barter system to the current modern derivative form. Commodity trading in India is done in physical markets (mandis) and through Electronic Trading platforms like MCX, NCDEX.

The Regulator for this segment is FMC – Forward Market commission.

Types of commodities:

• Agriculture commodities - All those commodities which are produced via agricultural activities like Wheat, Guar, Soya-bean, cotton, turmeric, etc.
• Base Metals - Metal commodities used mainly in industrial production units like Copper, Zinc, Aluminum, Nickel, and Lead.
• Precious Metals - Commodities which are used as an investment and are precious in nature like Gold, and Silver.
• Energy - Commodities which are used as energy source like Crude Oil and Natural Gas.

Commodity	Price Quotation	Lot Size	Tick Size in Rs.	Mini Lot
Gold	Per 10 grams	1 Kg (100 units)	1	10, 8, 1 grams
Silver	Per 1 Kg	30 Kgs	1	5, 1 Kgs
Crude Oil	Per barrel	100 barrel	1	NA
Natural Gas	Per mmbtu	1250 mmbtu	0.10	NA
Copper	Per Kg	1000 Kgs	0.05	250 Kgs
Nickel	Per Kg	250 Kgs	0.10	100 Kgs
Aluminium	Per Kg	5000 Kgs	0.05	1000 Kgs
Lead	Per Kg	5000 Kgs	0.05	1000 Kgs
Zinc	Per Kg	5000 Kgs	0.05	1000 Kgs

Commodity	Price Quotation	Symbol	Tick size	Trading Unit	Lot size
Barley	1 Quintal	BARLEYJPR	0.50	10 MT	100
Chana	1 Quintal	CHARJDDEL	1.00	10 MT	100
Maize	1 Quintal	MAIZYRNZM	1.00	10 MT	100
Wheat	1 Quintal	WHTSMQDELI	1.00	10 MT	100
Gur	40 Kg	GURCHMUZR	0.50	10 MT	250
Cardomom (MCX)	1 Kg	CARDOMOM	0.10	100 Kg	100
Pepper	1 Quintal	PPRMLGKOC	5.00	1 MT	10
Chilli	1 Quintal	CHLL334GTR	2.00	5 MT	50
Coriander	1 Quintal	DHANIYA	1.00	10 MT	100
Turmeric	1 Quintal	TMCFGRNZM	2.00	5 MT	50
Jeera	1 Quintal	JEERAUNJHA	2.50	3 MT	30
Ref. Soya Oil	10 Kg	REFSOYOIL	0.05	10 MT	1000
Soybean	1 Quintal	SYBEANIDR	0.50	10 MT	100
Mustard seed	1 Quintal	RMSEED	1.00	10 MT	100
Castor seed	1 Quintal	CASTORDSA	1.00	10 MT	100
Guargum	1 Quintal	GARGUMJDR	0.10	1 MT	100
Guarseed	1 Quintal	GARSEDJDR	1.00	1 MT	100
Kapas (MCX)	20 Kg	KAPAS	0.10	4 MT	200
Cotton (MCX)	1 Bale	COTTON	1.00	25 bales	25
Mentha Oil (MCX)	1 Kg	MENTHA OIL	0.10	360 Kg	360
Potato	1 Quintal	POTATO	0.10	15 MT	150
Potato (MCX)	1 Quintal	POTATO	0.10	30 MT	300

1 Quintal = 100 Kgs

1 MT (metric tonne) = 1000 Kgs

Need of Commodity Trading:

• Hedging tool for producers/farmers
• Speculative instrument
• Investment opportunity in Precious metals
• Arbitrage opportunity between Domestic and Foreign commodity markets

Currency 

Currency Derivative started in India back on 29th August 2008 by NSE currency derivative segment, currently there are 4 contracts traded in the Currency Derivative segment. RBI and SEBI are the regulators for this Product in India.

Currencies Traded in Indian Currency segment:

• US Dollar-Indian Rupee (USDINR)
• Euro-Indian Rupee (EURINR)
• Pound Sterling-Indian Rupee (GBPINR)
• Japanese Yen-Indian Rupee (JPYINR)

In India all the currencies are pegged to INR and the traders cannot trade in cross currency. GBP vs USD or EUR vs JPY is still not allowed in Indian Currency derivative markets. USDINR is the most widely traded currency.

RBI reference rate - RBI declares a reference rate daily at 12 noon, which acts as the spot price for currency derivative contracts.

Spread/ PIP - Spread is the minimum difference between buyer and seller also known as ‘Percentage in point’ in International Forex exchanges.

Lot Size – USD, EUR, JPY and GBP, all have a lot size of 1000 and a tick size of 0.0025.

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