Interviews
Gold prices to hover around $640 to 680 per ounce in Q4
07 Sep '06
2 min read
The commodity market, worldwide and in India, is witnessing exponential growth and trading in futures is becoming an important activity in the financial markets.
For instance, the Indian commodity futures market has grown to nearly 60 per cent of the Rs37 trillion equity derivatives market in a span of just 3 years. Buoyed by the trend, a number of players have already entered the market - exchanges, traders and corporates.
Nagarajan Narasimhan, Head, CRISIL Research, adds, "Commodity markets are maturing as an investment option. Corporates with exposure to commodities are using commodity markets as a hedging option whereas the investor community is diversifying their investments in equity markets with exposures to commodity markets.
Banks are also an important participant through their lending activity to the agriculture sector and intermediary activity in the bullion market. However, direct bank lending to the commodity segment has been low; thus it has huge growth potential.
It is also expected that banks and mutual funds will soon enter the futures market once regulatory changes allowing trading in commodities are put in place. To seize this opportunity, banks need to develop robust research and risk management systems, similar to their current focus on corporate lending.
Hence, there is a need for expert opinion and research on various commodities so that the participants have access to relevant information and analyses that will help them in their decision-making."
For instance, the Indian commodity futures market has grown to nearly 60 per cent of the Rs37 trillion equity derivatives market in a span of just 3 years. Buoyed by the trend, a number of players have already entered the market - exchanges, traders and corporates.
Nagarajan Narasimhan, Head, CRISIL Research, adds, "Commodity markets are maturing as an investment option. Corporates with exposure to commodities are using commodity markets as a hedging option whereas the investor community is diversifying their investments in equity markets with exposures to commodity markets.
Banks are also an important participant through their lending activity to the agriculture sector and intermediary activity in the bullion market. However, direct bank lending to the commodity segment has been low; thus it has huge growth potential.
It is also expected that banks and mutual funds will soon enter the futures market once regulatory changes allowing trading in commodities are put in place. To seize this opportunity, banks need to develop robust research and risk management systems, similar to their current focus on corporate lending.
Hence, there is a need for expert opinion and research on various commodities so that the participants have access to relevant information and analyses that will help them in their decision-making."
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