You could be an investor in equity funds but might be a beginner in stock and commodity. To begin with, commodity trading gives you an ideal asset allocation and also offers you an option against inflation. India did not allow commodity trading until 2003 when the ban was lifted.
The next question which naturally comes to mind is as to why you should invest in stock and commodity trading. The answer lies in the fact that commodities allow for a portfolio to improve the overall return at the similar level of risk. A leading US-based authority on asset allocation has estimated that commodities increased the return by 133 to 188 basis points and this came at no extra risk.
Once you know the basics of stock and commodity trading, the next question which comes to mind is that who should invest in commodities. If you are an investor who is looking forward to taking advantage of price movements and want to diversify your portfolio, you should think about investing in commodities. Commodity trading is otherwise an age old phenomena. Though the mechanism might have changed with time, commodity trading has evolved and is now a worldwide phenomenon.
The Indian commodity market has a daily average turnover of rs 12,000 to rs 15,000 crores.