Commodity Trading in India — 40+ Markets on MCX & NCDEX
Trade Gold, Silver, Crude Oil, Copper, and Agri commodities through India's trusted SEBI-regulated broker. Low margins, flat ₹20/order, live MCX and NCDEX prices on the Antara app.
What is Commodity Trading?
Commodity trading is the buying and selling of raw materials and primary products through regulated exchanges. In India, commodity trading takes place as exchange-traded derivatives — primarily futures and options — giving investors price exposure without physically handling the underlying goods.
Unlike equity trading on BSE/NSE, commodity derivatives are traded on MCX (Multi Commodity Exchange) and NCDEX (National Commodity & Derivatives Exchange), both regulated by SEBI since 2015. Commodities are broadly classified into metals, energy, and agricultural products — each with distinct price drivers, lot sizes, and trading hours.
MCX — Metals & Energy
MCX handles metals (gold, silver, copper, zinc, aluminium) and energy (crude oil, natural gas). Trading runs 9 AM–11:55 PM IST, covering international price discovery including the US trading session.
NCDEX — Agricultural Commodities
NCDEX specialises in agri commodities — soybean, chana, jeera, turmeric, cotton, guar. Agricultural contracts follow domestic price drivers including monsoon data and MSP announcements from the government.
Types of Commodities in India
India's commodity markets span five major categories traded across MCX and NCDEX. Each segment has distinct exchanges, lot sizes, and price drivers. Hard commodities include metals and energy resources; soft commodities cover agricultural products and livestock.
Hard Commodities
Precious Metals
Gold and silver traded on MCX. Driven by USD, global inflation, central bank reserves, and safe-haven demand. Lot size: Gold 1 kg, Silver 30 kg.
Energy
Crude oil and natural gas on MCX. Price drivers include OPEC supply decisions, US inventory data, weather, and geopolitics. Lot size: Crude 100 bbl.
Base Metals
Copper, zinc, aluminium on MCX. Closely linked to global manufacturing PMI and China economic data. Lot size: Copper 1,000 kg.
Soft Commodities
Agricultural
Soybean, chana, cotton, guar on NCDEX. Driven by monsoon data, MSP announcements, and domestic crop production. Lot size: Soybean 10,000 kg.
Soft Commodities
Jeera, turmeric, coriander, castor seed on NCDEX. Niche markets with strong seasonal price patterns and domestic consumption drivers.
Why Invest in Commodities? — Benefits
Commodities offer portfolio benefits that equities and fixed income alone cannot. Here are the five core reasons investors and hedgers choose commodity derivatives on MCX and NCDEX.
Inflation Hedge
Gold and silver historically preserve purchasing power during high-inflation periods — a natural store of value outside equities.
Portfolio Diversification
Commodities have low correlation with equities and bonds. Adding them reduces overall portfolio volatility across market cycles.
Leverage via Futures
Trade large notional positions with a fraction of capital through exchange-mandated SPAN + Exposure margin on MCX / NCDEX.
Global Demand Exposure
Participate in macro themes: China growth, energy transition, monsoon seasons, and OPEC supply cycles from a single Indian account.
Extended Trading Hours
MCX metals and energy contracts trade until 11:55 PM IST — covering the US session and key international price discovery windows.
Advantage of Commodities Trading with Shriram
Beyond the asset class itself, Shriram's platform adds specific advantages that make commodity trading more accessible, cost-effective, and transparent.
MCX + NCDEX in One Account
Access all commodity exchanges — metals, energy on MCX and agri commodities on NCDEX — through a single Shriram trading account.
Flat ₹20 Brokerage
Zero delivery brokerage on commodity positions. F&O orders capped at flat ₹20/order regardless of trade size or commodity.
Live Price Streaming
Real-time MCX and NCDEX prices on the Antara app with level-2 order book, commodity charts, and intraday alerts.
SEBI-Registered Broker
Shriram holds SEBI commodity broker registration INZ000002135. Fully compliant with MCX and NCDEX membership requirements.
Low Initial Margin
Start commodity trading from ₹7,000 (Gold Mini). Margin requirements displayed upfront before order placement.
40+ Years of Trust
Backed by the Shriram Group — one of India's most trusted financial conglomerates with ₹2 lakh crore AUM.
Disadvantage of Commodity Trading
Commodity derivatives carry risks that are distinct from equity investing. Understanding these six structural disadvantages helps you plan position sizes, stop-losses, and risk controls before placing your first trade.
Leverage Amplifies Losses
The same leverage that boosts gains can magnify losses rapidly. A 5% adverse move on a crude oil contract can wipe out your entire margin if position sizing is poor.
No Ownership of Asset
Commodity derivatives give price exposure — not ownership. You cannot take physical delivery unless you specifically have a warehouse account and opt for delivery settlement.
High Volatility
Commodity prices are sensitive to geopolitical events, weather, and global supply chains. Unexpected news can cause large gap openings and intraday swings within minutes.
Expiry and Rollover Risk
Futures contracts expire every month. Rolling to the next contract incurs rollover cost (spread between near and far month). Failing to roll before expiry triggers forced delivery/settlement.
Requires Active Monitoring
Commodity prices react to events outside Indian market hours — OPEC announcements, US inventory data, and LME metals prices. Positions left unmonitored overnight carry significant gap risk.
Tax Complexity
Commodity F&O profits are taxed as business income, requiring ITR-3 filing, turnover calculation, and potentially a tax audit if turnover exceeds ₹1 crore. Not as simple as equity capital gains.
How Commodity Trading Works — MCX & NCDEX
Commodity trading in India happens through exchange-traded futures and options contracts. When you buy a crude oil futures contract on MCX, you agree to buy a fixed quantity (100 barrels) at a predetermined price on a specific expiry date. Most retail traders square off positions before expiry, settling in cash rather than taking physical delivery.
Feature
MCX
NCDEX
Full Form
Multi Commodity Exchange
National Commodity & Derivatives Exchange
Focus
Metals, energy — Gold, Silver, Crude
Agri commodities — Soybean, Chana, Cotton
Trading Hours
9 AM – 11:30 PM / 11:55 PM IST
9 AM – 5 PM IST
Settlement
Cash + physical (gold, silver)
Mostly physical delivery
Exchange City
Mumbai
Mumbai
Regulator
SEBI
SEBI
Commodity Futures vs Options — Key Differences
Both instruments give exposure to commodity prices but differ fundamentally in obligation, risk profile, and capital requirement. Beginners usually start with futures for simplicity; options suit more experienced traders seeking defined-risk strategies.
Feature
Commodity Futures
Commodity Options
Obligation
Must settle at expiry (buy/sell)
Buyer has right only — no obligation
Premium
No premium — margin-based
Buyer pays upfront premium
Max Loss (buyer)
Unlimited (mark-to-market)
Limited to premium paid
Leverage
Higher leverage
Lower leverage
Complexity
Simpler — one contract to track
Strike, expiry, Greeks to manage
Best Use
Price speculation, import hedging
Premium income, defined-risk bets
How to Start Commodity Trading — Step by Step
Six steps from account opening to your first commodity trade — entirely online, no physical paperwork required. Commodity segment can be activated alongside your existing equity account.
Open Trading Account
Open Demat + Trading account with Shriram online in under 10 minutes. PAN, Aadhaar, bank details — fully paperless.
Activate Commodity Segment
Request MCX and/or NCDEX segment activation. Submit income proof for F&O activation. Done digitally in 24 hours.
Transfer Margin Funds
Transfer SPAN + Exposure margin via UPI or NEFT. Margin requirement displayed per commodity before placing order.
Select Commodity & Contract
Pick commodity (Gold, Crude, Soybean), contract month, and lot size. Near-month contracts have highest liquidity.
Place Buy / Sell Order
Market or limit order on MCX/NCDEX. Set stop-loss to cap downside. MTM profit/loss reflected in real time.
Square Off Before Expiry
Exit position before expiry to avoid physical delivery. Cash-settled contracts auto-settle at final settlement price.
SEBI Rules & Regulations for Commodity Trading in India
Commodity trading in India is fully legal and regulated by SEBI since 2015, when the Forward Markets Commission (FMC) was merged into SEBI. Every registered commodity broker must comply with position limits, margin reporting, and delivery settlement rules.
SEBI Registration
All commodity brokers must be registered with SEBI as stockbrokers with commodity segment approval. Shriram Reg: INZ000002135.
Position Limits
SEBI and exchanges set client-level position limits per commodity to prevent cornering. Limits reset each contract month.
Margin Reporting
Brokers must report daily client margin utilisation to MCX/NCDEX. Under-margined positions are squared off by the broker.
Delivery Settlement
Commodity contracts with physical delivery must be settled via accredited warehouses. Cash-settled contracts use final settlement price.
Commodity CTT
Commodity Transaction Tax (CTT) applies to non-agri commodity futures at 0.01% on sell side. Agri commodity futures are CTT-exempt.
Algorithmic Trading
Algo orders on MCX/NCDEX require prior exchange approval and risk controls compliant with SEBI circular SEBI/MRD/2/CIR/2012/2.
Taxation on Commodity Trading Profits
Commodity F&O profits are treated as business income — not capital gains — regardless of holding period. Maintain proper books of account and file ITR-3. Losses can be set off against other business income and carried forward for up to 8 years.
Transaction Type
Tax Treatment
CTT
ITR Form
Non-agri Commodity F&O
Non-speculative business income
0.01% on sell
ITR-3
Agri Commodity F&O
Speculative business income
CTT exempt
ITR-3
Physical Delivery Gains
Capital gains (STCG/LTCG)
CTT + STT apply
ITR-2 / ITR-3
Losses (F&O)
Set off vs business income
—
ITR-3 (audit if > ₹1 Cr)
Important: Consult a CA
Commodity F&O accounting requires turnover calculation (sum of absolute profits + losses), Books of Account under Section 44AB if turnover exceeds ₹1 Cr, and proper disclosure of open positions at year-end. Always consult a chartered accountant for your specific situation.
Commodity Trading Strategies for Beginners
These are the most widely used approaches in Indian commodity markets. Each suits a different risk appetite, capital size, and time horizon. Start with one strategy and a single commodity before diversifying.
Trend Following
Use 20-day and 50-day moving averages on Gold and Crude Oil charts to identify directional momentum. Trade with the trend, not against it.
Spread Trading
Go long near-month and short far-month (calendar spread) to capture basis differentials — lower risk than outright directional bets.
Seasonal Gold Strategy
Gold historically strengthens Oct–Feb driven by festive demand and central bank buying. Monitor USD Index and FOMC rate decisions.
Agri-Monsoon Play
NCDEX agri prices are highly sensitive to monsoon rainfall data. Build positions before IMD forecasts and exit after the sowing season.
Essential Rules for Risk Management
Effective risk management is the single most important factor separating long-term successful commodity traders from those who blow up accounts. Follow these five rules consistently — especially as a beginner.
Always Use a Stop-Loss
Set a stop-loss for every commodity trade to limit potential losses and protect your trading capital from unexpected market movements — especially overnight gaps.
Avoid Overleveraging
Trade within your financial capacity. Avoid positions that require more than 20–25% of your total capital in a single commodity — leverage amplifies both gains and losses.
Diversify Across Commodities
Avoid concentrating all your capital in a single commodity or segment. Spread exposure across metals, energy, and agri to reduce correlation risk.
Risk Only What You Can Afford
Allocate only a small portion of your trading capital per trade. Never commit funds meant for essential expenses or long-term goals to speculative commodity positions.
Follow a Pre-Defined Trading Plan
Enter trades with pre-set entry, target, and exit levels. Avoid making emotional decisions based on short-term price fluctuations or news headlines.
Frequently asked
questions.
What is commodity trading in India?
Commodity trading in India is the buying and selling of raw materials — metals, energy, and agri products — through exchange-traded futures and options contracts on MCX (Multi Commodity Exchange) and NCDEX (National Commodity & Derivatives Exchange), both regulated by SEBI.
Is commodity trading legal in India?
Yes. Commodity trading on SEBI-regulated exchanges MCX and NCDEX is 100% legal. Avoid unregulated offshore platforms and OTC dealers that are not registered with SEBI — those are illegal under FEMA and SCRA.
What is the difference between MCX and NCDEX?
MCX focuses on metals (gold, silver, copper) and energy (crude oil, natural gas) with trading hours until 11:55 PM IST. NCDEX focuses on agricultural commodities (soybean, chana, cotton) with hours until 5 PM IST.
What is the minimum capital to start commodity trading?
You can start from ₹7,000–₹10,000 with a Gold Mini contract (100 grams). A full Gold contract (1 kg) requires ₹70,000–₹90,000 in margin. Crude oil requires approximately ₹30,000–₹40,000 per lot.
How is commodity trading taxed in India?
Non-agri commodity F&O profits are taxed as non-speculative business income at your applicable slab rate. Agri commodity F&O profits are treated as speculative business income. File ITR-3 and disclose all commodity transactions.
What is CTT in commodity trading?
CTT (Commodity Transaction Tax) is charged at 0.01% on the sell side for non-agricultural commodity futures contracts on MCX. Agricultural commodity derivatives are exempt from CTT. CTT is deductible as a business expense.
Can I take physical delivery of gold on MCX?
Yes. Selected MCX Gold and Silver contracts allow physical delivery. You must specify delivery intent before the delivery period begins and have a registered vault account. Most retail traders square off before expiry.
What is SPAN margin in commodity trading?
SPAN (Standard Portfolio Analysis of Risk) margin covers the worst-case one-day loss on your commodity position as calculated by the exchange. Exposure margin is added on top. Both are blocked when you enter a futures position.
What are trading hours for MCX?
MCX trading runs from 9:00 AM to 11:30 PM IST for most contracts. International contracts (crude oil, copper, gold) extend to 11:55 PM to cover the US trading session. Saturday and Sunday are non-trading days.
What is the lot size for crude oil on MCX?
The standard crude oil lot size on MCX is 100 barrels. A Mini crude contract is 10 barrels, suitable for smaller capital. Lot sizes are standardised by the exchange and cannot be changed.
Open Commodity Trading Account — MCX & NCDEX
Zero account opening fee. SEBI-registered. Flat ₹20/order. 40+ years of trust.