Wed. Feb 21st, 2024
commodity market

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It is no surprise that over the past two decades, the Indian economy has been expanding and gaining recognition globally. Whether it is in the technology sector or core industrial roles, the country has grown significantly. But, this growth is not only limited to the services and technology industry. With the way global events unfold and the policies change for other countries, the Indian commodity market is also gaining traction.

Indicators for an evolving commodity market

Over the last few months, the commodity market has seen a lot of action and movement. From fluctuations and rise in crude oil prices to the increasing global demand for base metals. The Indian market is no different from the rest and is following the queue of other matured economies.

As compared to the energy prices last year, post-pandemic, the overall commodity prices have dropped. This drop can be attributed to market corrections and other geopolitical factors since the beginning of this year. Also, during the first quarter, with the positions for Russia, China and Opec nations, we have seen a reallocation of commodity trade flows. We can see strong indicators of India growing as a strategic energy consumer for Russia in view of the war, which has influenced the economic trends for the country.

Additionally, we are observing maturity in the metal and commodity space. As of 2023, the Indian commodity has grown and we have over 700 MCX exchanges operational across the nation. Recently, the trading for commodities like gold, copper, steel and other raw metals has increased. Traders are not only investing in raw metal futures but also in other financial products for these alongside that for crude and energy commodities. Furthermore, third party data analysis are also seeing a rise in open demat account for individual investors.

What to expect in the near future

As the Indian market continues to develop and the fast-growing economy of the country will also boost the industrial and commercial needs. According to various energy outlook reports and expert analysis, within the next decade, India could become the third-largest economy after China and USA. This, in turn, indicates that the energy consumption needs for the nation will increase rapidly. We already see many corporations investing in infrastructural development in the Indian subcontinent. All these show a positive inclination towards an upward trajectory for the Indian commodity market.

Market investment trends also show that investors are not only investing the raw commodities and linked assets. Fundamental analysis also shows signs that institutional investors are using other complex financial products to hedge their exposure and offset their future positions. All in all, these offer a great opportunity for the commodity market and these trends can further realise in the new future as the MCX indexes and that for NIFTY depict a much clearer move.

As the market and industrial segment future expands and India grows on a global scale, commodity consumption is likely to increase. This would, in turn, bring more stability and change in the commodity market in the upcoming years. However, it is worth noting that global outlook and internal policies would play a critical role in how the returns for the market turn out for the early movers.

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