Last updated on 10th Aug 2020
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Commodities Trading in India is offered by two major exchanges - MCX (Multi-Commodity Exchange) and NCDEX (National Commodity and Derivative Exchange).
The Commodity derivatives market in India is regulated by SEBI. A future contract is the most popular route to invest in commodities. It is an agreement for buying or selling a particular quantity of a commodity at a predetermined price at a future date. In this, margin money is required upfront to take positions in commodity futures contracts. Margin percentage varies between 4% to 10%, depending upon various factors.
MCX allows trading mostly in Bullion, Energy, Base Metals and limited trading in Agro commodities. Recently MCX started options trading in Gold, Copper, Silver, Zinc and Crude Oil. Gold is the most traded contract on MCX. There are different gold contracts available to trade like Gold (The Big Gold), Gold Mini, Gold Guinea, and Gold Petal. NCDEX allows trading mainly in Agro Commodities.
NSE and BSE recently started commodity trading in Futures. Commodity Trading on NSE currently offers under Gold and Gold Mini futures contract and Commodity Trading on BSE offers under Gold, Guar Seed, Cotton, Turmeric and Brent Crude Oil Futures.
To start commodities trading in India, you need to open a commodity trading account. If you wish to do commodity trading on NSE and BSE (since NSE and BSE started offering commodity trading), a lot of brokers can be the option. But in case you wish to do commodity trading on MCX and NCDEX, then you need a broker who is a member of MCX and NCDEX specifically. There are lots of options and the biggest concern for the investor is to select the best commodity broker.
Below you will see "The Best Commodity Brokers in India" or "The Best Brokers for Commodity Trading in India" or "Top 5 Commodities Brokers in India" but we will recommend you to choose wisely based on your preferences:
Tamil Nadu based broker, Alice Blue is the number one commodity broker in south India. Alice blue got MCX membership in 2007 & NCDEX in 2008 and won the Best Commodity Brokerage house - South award from MCX in 2018.
Alice Blue Commodities Pvt LTD has a corporate office in Bangaluru and has a PAN India presence with 1000+ partners. Alice Blue offers both discount brokerage (flat fee of Rs 20) as well as traditional plan (percentage-based) for commodity trading. Alice Blue is the first broker to offer CO and BO in the commodity segment. They offer up to 30x margin for Non-Agri commodities with cover orders and 10x for MIS orders. Alice Blue offers the best trading platform for commodity trading – ANT MOBI (mobile app), ANT Web (web trading) and ANT Desk (desktop platform).
Zerodha is the Bangaluru based number one discount broker in India. Zerodha offers Commodity trading on MCX only. Zerodha doesn't allow you to get into the physical delivery of commodities. So you will be forced to close the position before the 1st of the expiry month. Charges for commodity trading with Zerodha is Rs. 20 per executed order.
Zerodha offers online education on Varsity to know all about Commodity trading in India. Single sign-in for equity, commodity and currency trading and advanced trading platforms like KITE and Pi over the web, desktop, and mobile app is offered. Zerodha offers cover orders, MIS and Carry forward position in Commodity Derivatives. Online Margin Calculator is available to calculate margin requirements upfront. In general, the best broker in the current scenario in terms of innovative ideas, technology, customer support, and brokerage charges.
Upstox is the Mumbai based, the fastest growing discount broker in India. Commodity trading with Upstox is available at Rs 20 per executed order on MCX only. Upstox has in-house developed trading platforms – Upstox Mobile and Upstox Web. Single sign-on for equity, commodity and currency trading is possible. Upstox offers MIS, CO and NRML order for commodity trading and up to 3x margin for MIS/CO orders.
Angel Commodities Broking Pvt Ltd is a member of MCX & NCDEX and allows trading in all the commodities. Angel Broking is a full-service broker and provides all the services like online trading, call, and trade, tips and recommendations by a special team of research analysts. Charges for commodity trading with Angel Broking is Rs 20 per executed order.
The company offers free commodity trading account. Angel Broking offers Margin Funding with high exposure. For beginners, Angel broking is the best suit as they offer comprehensive research and analysis, fundamental, technical and special reports, tips and recommendations through SMS, email, and phone. Also, the company has a presence in 900 cities in India with more than 8500 sub-brokers and partners. Angel broking also offers services of relationship managers and dealers for personal assistance.
Tradeplus, Chennai based discount broker provides commodity trading on MCX at the lowest brokerage cost with a monthly plan but doesn’t provide any RM, research, tips or recommendation.
Tradeplus offers two plan - Rs 9 per executed order and Rs 99 per month unlimited plan for Commodity trading. Even though brokerage charges are the lowest in the market, Tradeplus charge clearing charges of Rs 140 per Cr on Commodities Futures, 5000 per Cr on Sale Of Options Premium and On Expiry - Exercise Trade. The broker offers a robust trading platform INFINI -TRADER (NEST) for trading exclusively in the commodity segment. Margin funding is also available with 2% interest pm.
In contrary to equity settlement, in commodities the settlement is physical and therefore 'delivery' is compulsory. However, you can square off your position at 1st of the expiry month to avoid physical delivery of a commodity. In order to get the delivery of the commodity, one has to express his intention to do so. This has to be done any time before 4 days to expiry. So, given that the expiry is on 5th, one has to express his intent to take delivery anytime on or before 1st.
Key Advantages of Commodity Trading:
To do commodity trading in India, you need a broker who is members of MCX and/or NCDEX (commodity exchanges). The commodity trading account is separate from Equity and currency trading Account. If your broker offers a commodity trading services, then you need to open a separate commodity trading account other than trading and demat account or request specifically in case of a new account.
In case your broker does not deal in commodity trading services, you need to open an account with the broker who offers commodity services. You can take help from our list of brokers providing commodity trading services in India. Compare their attributes and choose one which suits your requirements.
Most full-service brokers like Sharekhan, Angel Broking, Motilal Oswal, Edelweiss etc offer commodity trading and add on services like research reports, tips & recommendations and relationship managers to facilitate your trading. Brokerage charged by them is a percentage based on lot size. Discount brokers like Alice Blue(₹20), Zerodha(₹20), Upstox(₹20), etc. charge a flat fee whether you buy 1 lot or 10 lots.
Commodity trading was not available with the brokers that are associated with Banks or providing 3-in-1 accounts (ICICI Direct, HDFC Securities, SBI Securities, Axis Direct, Kotak Securities). After changes in SEBI guidelines, Axis Direct (a subsidiary of Axis Bank) has started Commodity trading on MCX in 2018.
Most of the brokers offer commodity trading online through their trading website, mobile trading apps and desktop trading software. Commodity trading account opening online is a hassle-free process nowadays. To open an instant online commodity trading account, you will need an Aadhar card with your current mobile number linked with it, PAN card, digital photo, bank statement, cancled cheque and photo of your signature. Account opening process is 100% online and can open account in 15 mins. Once your commodity account is open and active, the broker will send you an email with details of the login id and password for your commodity trading account with them.
Alice Blue is the Erode, Tamil Nadu based commodity broker. They are the number one commodity broker in the South. Alice blue has most of the branch offices in Tamilnadu including Chennai, Coimbatore, Erode, Karur, Madurai, Nagercoil, and sub-brokers network. The broker offers language-specific (Tamil) customer support. Alice Blue offers the best-in-class online trading platform for commodity trading and a higher margin. Alice blue offers a discount brokerage plan (₹20 per executed order) as well as a percentage-based brokerage plan.